According to the New Keynesian Cycle Theory of the Business

question 129

Multiple Choice

According to the new Keynesian cycle theory of the business cycle, which of the following can trigger a business cycle expansion?

• A)I only
• B)II and III
• C)I, II and III
• D)None of these three will trigger an expansion.

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Definitions:

Short-Run Supply

The quantity of goods and services that producers are willing and able to offer for sale at different prices over a short period, during which at least one input is fixed.

Long-Run Supply

The total quantity of goods or services that a market can produce and provide over a long period, considering all relevant input adjustments.

Lowest Price

The minimum cost at which a product or service is offered in the market.

Short Run

A period of time in economics during which at least one input, usually capital, is fixed and cannot be changed.