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.
Answer:A
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.