Which of the following is the most likely cause of most recessions according to the new classical model?
A)a change in the money supply.
B)an increase in taxation and government spending.
C)a fall in expected profits.
D)a rise in the price of oil.
E)an unanticipated change in the money supply.

Question

Quizplus · Accepted Answer

According to the new classical model, most recessions are caused by unanticipated changes in the money supply. This can lead to fluctuations in the economy, as individuals and businesses may have made plans based on their expected level of income and spending, which can be disrupted by sudden changes in the money supply. This can lead to a decrease in spending and investments, which can in turn cause a recession.

Which of the Following Is the Most Likely Cause of Most