CA Foundation P4 · Chapter 6 · Question 6 of 15
According to Keynes, business cycles are caused mainly by:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) Fluctuations in aggregate effective demand
Explanation
Keynes attributed economic fluctuations to changes in aggregate effective demand, particularly volatile investment driven by changes in the marginal efficiency of capital. Credit expansion is Hawtrey's explanation, innovations are Schumpeter's and sunspots are Jevons'.
More Business Cycles MCQs
- Q8According to Schumpeter, business cycles are caused by:
- Q9The theory that business cycles result from waves of optimism and pessimism among businessmen is associated with:
- Q10The 'sunspot theory' of business cycles, which linked fluctuations in agricultural output to changes in sunspot activity, was put forward…
- Q11The worldwide economic downturn that began with the stock market crash of 1929 is known as:
- Q12A commonly used rule of thumb defines a recession as: