Most economists agree that the immediate cause of the majority of cyclical changes in the level of real output is unexpected changes in the
A) level of total spending.
B) rate of unemployment.
C) rate of inﬂation.
D) stock market price indexes.

Question

Quizplus · Accepted Answer

Most economists attribute the majority of cyclical changes in the level of real output to unexpected changes in the level of total spending in the economy. When spending increases unexpectedly, firms try to increase their output leading to an increase in the level of real output. Conversely, if spending decreases unexpectedly, firms try to reduce their output leading to a decrease in the level of real output. Therefore, the level of total spending is considered the immediate cause of most cyclical changes in real output.

Most Economists Agree That the Immediate Cause of the Majority