Business cycle events that arise solely from aggregate demand shifts are emphasized by the
A) Keynesian and monetarist cycle theories.
B) monetarist and real business cycle theories.
C) Keynesian and real business cycle theories.
D) none of the major theories

Question

Quizplus · Accepted Answer

Keynesian and monetarist theories emphasize the role of aggregate demand in business cycle events, while real business cycle theory emphasizes productivity shocks and supply-side factors. Choice B is incorrect because real business cycle theory does not consider shifts in aggregate demand to be the primary cause of business cycle fluctuations. Choice C is also incorrect because although Keynesian theory emphasizes aggregate demand, real business cycle theory does not. Choice D is incorrect because aggregate demand shifts are a major concept in both Keynesian and monetarist theories.

Business Cycle Events That Arise Solely from Aggregate Demand Shifts