What Is the Primary Reason That Changes in Total Spending

question 84

Multiple Choice

What is the primary reason that changes in total spending lead to cyclical changes in output and employment?

• A) Government is unable to respond by changing the amount of money in circulation.
• B) Changes in total spending cause supply shocks that cause cyclical variation.
• C) Prices are sticky in the short run.
• D) Prices are flexible in the long run.

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