According to mainstream business cycle theory, ________ grows at a steady rate and ________ grows at a fluctuating rate.
A)aggregate demand; long-run aggregate supply
B)potential GDP; aggregate demand
C)potential GDP; short-run aggregate supply
D)short-run aggregate supply; long-run aggregate supply
E)short-run aggregate supply; aggregate demand

Question

Quizplus · Accepted Answer

According to mainstream business cycle theory, potential GDP grows at a steady rate due to growth in the factors of production, while aggregate demand grows at a fluctuating rate due to changes in consumer and investment spending.

According to Mainstream Business Cycle Theory, ________ Grows at a Steady