When the economy fluctuates around its long-run aggregate supply:
A)it is called the business cycle.
B)the economy is in a state of chaos.
C)the value of currency becomes unstable.
D)None of these is true.

Question

Quizplus · Accepted Answer

The fluctuations in the economy around its long-run aggregate supply are referred to as the business cycle. This cycle involves periods of expansion and contraction in economic activity, including fluctuations in production, income, and employment. These fluctuations are caused by a variety of factors such as changes in consumer and business confidence, government policies, and international trade.

When the Economy Fluctuates Around Its Long-Run Aggregate Supply