In the Keynesian business cycle theory, business cycles begin with a change in
A)inflation expectations.
B)government expenditure.
C)business confidence.
D)monetary policy.
E)the money wage rate.

Question

Quizplus · Accepted Answer

Keynesian business cycle theory suggests that business cycles are primarily driven by changes in aggregate demand, which can be significantly influenced by changes in business confidence. When businesses are optimistic, they invest more, increasing aggregate demand and potentially leading to economic expansion. Conversely, a decline in business confidence can reduce investment and aggregate demand, leading to a contraction.

In the Keynesian Business Cycle Theory, Business Cycles Begin with a Change