The factor that leads to business cycles within Keynesian cycle theory is
A) the growth rate in the quantity of money.
B) fluctuations in business confidence.
C) adverse shocks to international trade.
D) the growth rate in labor productivity.

Question

Quizplus · Accepted Answer

Keynesian cycle theory states that business cycles are caused by fluctuations in business confidence, which leads to fluctuations in investment and consumption. The theory places less emphasis on monetary policy and more on the role of government intervention in stabilizing the economy.

The Factor That Leads to Business Cycles Within Keynesian Cycle