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According to the New Keynesian Cycle Theory of the Business

Question 62

Multiple Choice

According to the new Keynesian cycle theory of the business cycle, which of the following can trigger a business cycle expansion?
I. an unexpected increase in the quantity of money
II. an expected increase in the quantity of money
III. an expected increase in government expenditure


A) I, II and III
B) I only
C) II and III
D) None of the three will trigger an expansion.

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