According to classical economists
A) the aggregate demand shocks are the source of business cycles.
B) the aggregate supply shocks are the source of business cycles.
C) the aggregate demand shocks have long-run effects on output.
D) the aggregate supply curve is horizontal.

Question

Quizplus · Accepted Answer

According to classical economists, the source of business cycles is aggregate supply shocks. This means that changes in production costs, such as increases in wages or raw material prices, can shift the aggregate supply curve and cause fluctuations in output and employment. This is in contrast to Keynesian economists, who believe that aggregate demand shocks are the primary cause of business cycles.

According to Classical Economists