The ________ cycle theory states that only unexpected fluctuations in aggregate demand bring fluctuations in real GDP around potential GDP.
A)new Keynesian
B)new classical
C)Keynesian
D)monetarist
E)real business

Question

Quizplus · Accepted Answer

The new classical cycle theory, also known as the real business cycle theory, suggests that fluctuations in real GDP around potential GDP are only caused by unexpected shifts in aggregate demand. This theory emphasizes the role of supply-side factors such as technology, labor market frictions, and government policies in determining economic fluctuations.

The ________ Cycle Theory States That Only Unexpected Fluctuations in Aggregate