Keynesians and monetarists believe that economic fluctuations are caused
A) by shifts in both the AS and AD curves.
B) largely by shifts in the AD curve.
C) changes in the structural deficit.
D) by fiscal policy.

Question

Quizplus · Accepted Answer

Keynesians and monetarists both believe that economic fluctuations are largely caused by shifts in the aggregate demand (AD) curve. Keynesians believe that the government can use fiscal policy to stabilize the economy during these fluctuations, while monetarists believe that the key to stabilization is controlling the money supply. Both theories acknowledge some influence from supply-side factors but see them as generally secondary to demand-side fluctuations. Therefore, the best answer is B, largely shifts in the AD curve, since this aligns with the theories of both Keynesians and monetarists.

Keynesians and Monetarists Believe That Economic Fluctuations Are Caused