The mainstream view of macro instability is that
A) changes in the money supply directly cause changes in aggregate demand and thus cause changes in real GDP.
B) changes in investment shift the aggregate demand curve and thus cause changes in real GDP.
C) bursts of innovation put the economy on an unsustainable growth path, eventually producing recession.
D) changes in technology and resource availability are the two main sources of ﬂuctuations of real GDP.

Question

Quizplus · Accepted Answer

The mainstream view of macro instability is that changes in investment shift the aggregate demand curve and thus cause changes in real GDP. This view is rooted in Keynesian economics, which emphasizes the importance of aggregate demand in driving economic fluctuations. While changes in the money supply and technological innovation can also have an impact on the economy, investment is seen as the primary driver of macro instability according to this view.

The Mainstream View of Macro Instability Is That