Which business cycle model believes that policy measures designed to reduce deviations from trend are misguided?
A)The real business cycle.
B)The supply side new classical model.
C)The demand side Keynesian model.
D)The supply side Keynesian model.

Question

Quizplus · Accepted Answer

The real business cycle model believes that business cycles are caused by real shocks to the economy and policy measures designed to reduce the deviations from the trend are misguided. This is because they believe that markets are efficient and will naturally adjust to any shocks in the economy. The other models mentioned believe that policy measures can have an impact on reducing deviations from trend.

Which Business Cycle Model Believes That Policy Measures Designed to Reduce