The New Keynesian Cycle Theory of the Business Cycle Regards

question 322

Multiple Choice

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

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

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Definitions:

MC (Marginal Cost)

Marginal Cost is the change in total cost that arises when the quantity produced is incremented by one unit.

Shutdown Point

The level of operations at which a company or business does not generate enough revenue to cover its variable costs, leading to a temporary or permanent closure.

AVC (Average Variable Cost)

The total variable costs (costs that vary with the level of output) divided by the quantity of output produced, representing the variable cost per unit.

MC (Marginal Cost)

The rise in overall expenses associated with the production of an extra unit of a product or service.