In looking at the cyclical pattern of the recessions and expansions since the Great Depression, researchers are in general agreement that the biggest cause of the ups and downs was which of the following?
A)shocks to the aggregate supply curve
B)policy errors by the Federal government
C)too much illiteracy
D)fluctuations in aggregate demand

Question

Quizplus · Accepted Answer

Researchers generally agree that fluctuations in aggregate demand, which refers to the spending behavior of households, businesses, and governments, is the biggest cause of economic ups and downs. When aggregate demand drops, businesses produce less and often lay off workers, leading to a contraction in the economy. Conversely, when aggregate demand increases, businesses produce more and may hire more workers, leading to an expansion in the economy. Shocks to the aggregate supply curve or policy errors by the Federal government can also impact the economy, but they are generally viewed as less significant than fluctuations in aggregate demand.

In Looking at the Cyclical Pattern of the Recessions and Expansions