- CFA Exams
- CFA Level I Exam
- Study Session 4. Economics (1)
- Reading 15. Understanding Business Cycles
- Subject 2. Theories of the Business Cycle
CFA Practice Question
No government intervention is needed if a recession occurs. Unemployment and excess supply of goods will be solved by allowing market prices to decrease until all markets clear. This is the view of the ______.
B. Keynesian school
C. New Classical school
A. Neoclassical school
B. Keynesian school
C. New Classical school
Correct Answer: A
Neoclassical economists believe that supply creates its own demand and that all markets will reach equilibrium because of the "invisible hand."
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