The new classical theory argues that the primary factor leading to business cycles is
A)unexpected fluctuations in short- run aggregate supply.
B)expected fluctuations in aggregate demand.
C)unexpected fluctuations in long- run aggregate supply.
D)unexpected fluctuations in aggregate demand.
E)expected fluctuations in short- run aggregate supply.

Question

Quizplus · Accepted Answer

The new classical theory posits that business cycles are primarily caused by unexpected fluctuations in aggregate demand, as firms and consumers adjust their behaviors based on the information available to them, leading to economic expansions and contractions.

The New Classical Theory Argues That the Primary Factor Leading