The impulse leading to business cycles in the Keynesian model is changes in
A) the expected future price level.
B) open market operations.
C) business confidence.
D) the structural deficit.

Question

Quizplus · Accepted Answer

According to the Keynesian model, changes in business confidence lead to changes in investment spending, which results in fluctuations in the economy and the occurrence of business cycles. Therefore, the correct choice is C - business confidence.

The Impulse Leading to Business Cycles in the Keynesian Model