Which of the Following CORRECTLY Describes the New Classical Cycle

question 102

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 unexpected change in the price of oil can trigger a business cycle.
• D) Rational expectations keep the money wage from changing quickly.

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Definitions:

Cement

A binding agent used in construction that sets, hardens, and adheres to other materials, commonly used to bind sand and gravel in concrete.

Downward Sloping

A term typically used to describe a demand curve that shows the inverse relationship between the price of a product and the quantity demanded.

Demand Curve

A graphical representation showing the relationship between the price of a good and the quantity of that good that consumers are willing to purchase.

Perfectly Competitive Firm

A company that sells a product for which there are many sellers and buyers, and where its product is identical to that of competitors, meaning it has no control over market price.