The business cycle impulse in the new classical theory of the business cycle is
A) expected changes in aggregate demand.
B) unexpected changes in aggregate demand.
C) fluctuations in money growth with rigid wages.
D) fluctuations in investment coupled with rigid wages.

Question

Quizplus · Accepted Answer

According to the new classical theory of the business cycle, the business cycle impulse refers to unexpected changes in aggregate demand, which can be caused by factors such as shifts in consumer or investor confidence or changes in government spending. These unexpected changes can lead to fluctuations in output, employment, and prices in the short run.

The Business Cycle Impulse in the New Classical Theory of the Business