The New Keynesian Cycle Theory of the Business Cycle Regards

question 320

Multiple Choice

The new Keynesian cycle theory of the business cycle regards ________ as the main source of economic fluctuations.

• A) only unexpected fluctuations in aggregate demand
• B) expected and unexpected fluctuations in aggregate demand
• C) only expected fluctuations in aggregate demand
• D) changes in business confidence

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Definitions:

Directed Thinking

Thought that is focused, goal-oriented, and follows logical steps towards a specific conclusion.

Mental Set

The perspective that a person takes and the assumptions he makes in approaching a problem.

Analogical Representation

A mental representation of one thing that is similar in some way to another; used in problem-solving and reasoning.

Propositions

Statements or assertions that express judgments or opinions which can be either true or false.