In the coordination failure model,the most likely explanation of business cycles are
A) money supply shocks.
B) government spending shocks.
C) total factor productivity shocks.
D) fluctuations between "good" and "bad" equilibria.

Question

Quizplus · Accepted Answer

The coordination failure model suggests that business cycles arise due to fluctuations between "good" and "bad" equilibria. This means that even if there are no significant shocks to the economy such as money supply or government spending, the economy can still experience booms and recessions due to coordination failures among agents.

In the Coordination Failure Model,the Most Likely Explanation of Business