The New Classical Theory Argues That the Primary Factor Leading

question 72

Multiple Choice

The new classical theory argues that the primary factor leading to business cycles is

• A)expected fluctuations in aggregate demand.
• B)expected fluctuations in short-run aggregate supply.
• C)unexpected fluctuations in aggregate demand.
• D)unexpected fluctuations in short-run aggregate supply.
• E)unexpected fluctuations in long-run aggregate supply.

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Definitions:

Quantitative Relationship

A relationship that can be expressed as a mathematical equation, showing how changes in one variable affect another quantitatively.

Marginal Product

The additional output that is produced by using one more unit of a particular input while keeping other inputs constant.

Production Possibilities

A curve or frontier that shows the maximum combinations of goods or services that can be produced with a given set of resources and technology.

Marginal Product

The additional output that is produced by using one more unit of a factor of production, while holding other factors constant.