Which of the following is not seen by economists as an underlying cause of business cycle fluctuations?

A. Unexpected financial bubbles that eventually burst.

B. Shocks to the money supply by the nation's central bank.

C. Supply shocks caused by major innovations.

D. All of these are identified as causes of business cycle changes.

Question

Business

Matilda Vang

13 February, 05:10

Which of the following is not seen by economists as an underlying cause of business cycle fluctuations?

A. Unexpected financial bubbles that eventually burst.

B. Shocks to the money supply by the nation's central bank.

C. Supply shocks caused by major innovations.

D. All of these are identified as causes of business cycle changes.

+2

Answers (1)

Know the Answer?

Lydia Bernard · Answer 1

D. All of these are identified as causes of business cycle changes.

Explanation:

"The business cycle describes the rise and fall in production output of goods and services in an economy. Business cycles are generally measured using the rise and fall in the real gross domestic product (GDP) or the GDP adjusted for inflation.

The business cycle should not be confused with market cycles, which are measured using broad stock market indices. The business cycle is also different from the debt cycle, which refers to the rise and fall in household and government debt.

[ ... ] Some economists believe that the business cycle is a natural part of the economy. But there are others who believe that central banks indirectly control the cycle by intervening with monetary policy. When the economy is expanding too quickly, central bankers will step in and tighten the money supply and raise interest rates."

Reference: Kenton, Will. "What You Need to Know About Business Cycle." Investopedia, Investopedia, 9 Oct. 2019