Alternating periods of economic growth and contraction are
A)The result of government intervention according to Keynes.
B)The result of recurrent shifts of aggregate demand and aggregate supply.
C)Indicative of an unstable economy and require government intervention according to classical economists.
D)Not typical of the U.S.economy.

Question

Quizplus · Accepted Answer

Alternating periods of economic growth and contraction, known as business cycles, are the result of recurrent shifts of aggregate demand and aggregate supply. This is a concept recognized by most economists, including Keynesians and classical economists. It is a natural occurrence in a market economy and not necessarily indicative of an unstable economy. While government intervention may be necessary in certain situations, it is not always required to address business cycles. Option D is incorrect as alternating periods of economic growth and contraction are typical of all market economies, including the US.

Alternating Periods of Economic Growth and Contraction Are