Suppose that forecasters have incorrectly estimated aggregate demand. According to the , this mistake could trigger a business cycle.
A) Keynesian cycle model
B) the new classical cycle model
C) the real business cycle model
D) the monetarist cycle model

Question

Quizplus · Accepted Answer

The new classical cycle model suggests that business cycles can be triggered by incorrect expectations about aggregate demand, as it emphasizes the role of information and expectations in economic fluctuations.

Suppose That Forecasters Have Incorrectly Estimated Aggregate Demand