According to Keynesian coordination failure theory,the primary causes of business cycles are
A) monetary factors.
B) technology shocks.
C) waves of self-fulfilling optimism and pessimism.
D) fiscal shocks.
E) shocks to aggregate demand.

Question

Quizplus · Accepted Answer

According to Keynesian coordination failure theory, business cycles are primarily caused by waves of self-fulfilling optimism and pessimism, also known as animal spirits. These waves can lead to fluctuations in investment, output, and employment, ultimately resulting in economic booms and busts. Monetary and fiscal factors may exacerbate these cycles, but they are not seen as the primary cause. Technology shocks and aggregate demand shocks may also have an impact on business cycles, but again, they are not seen as the primary driver according to this theory.

According to Keynesian Coordination Failure Theory,the Primary Causes of Business