Which of the Following Correctly Describes the New Classical Cycle

question 350

Multiple Choice

Which of the following correctly describes the new classical cycle theory of the business cycle?

• A) An unexpected change in the quantity of money can trigger a business cycle.
• B) An expected tax rate change can trigger a business cycle.
• C) An expected change in the level of exports can trigger a business cycle.
• D) Rational expectations keep the money wage from changing quickly.

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Definitions:

External Financing

Funds raised from outside the company, typically through borrowing, issuing equity, or receiving grants, as opposed to internal funds generated from operations.

Full Capacity

The maximum level of output that a company can sustain over a period of time without increasing costs.

Total Assets

The sum of all assets owned by an entity, including both current and non-current assets.

Sustainable Growth Rate

The maximum rate at which a company can grow its earnings without needing to issue new equity or take on additional debt.