The factor leading to business cycles in the __________cycle theory is unexpected fluctuations in aggregate demand while in the __________cycle theory both unexpected and expected fluctuations in aggregate demand are factors that lead to business cycles.
A) new Keynesian; Keynesian
B) new classical; new Keynesian
C) monetarist; new Keynesian
D) new classical; monetarist

Question

Quizplus · Accepted Answer

The new classical cycle theory focuses on both expected and unexpected fluctuations in aggregate demand, while the new Keynesian cycle theory primarily focuses on unexpected fluctuations in aggregate demand. The other options either do not accurately describe the factors leading to business cycles in these theories or are not distinct from each other in terms of their focus on expected versus unexpected fluctuations.

The Factor Leading to Business Cycles in the __________Cycle Theory