- CFA Exams
- CFA Exam: Level I 2021
- Study Session 4. Economics (1)
- Reading 15. Understanding Business Cycles
- Subject 2. Theories of the Business Cycle
CFA Practice Question
The Keynesian model believes that changes in ______ bring an economy to equilibrium.
B. output prices
C. resource prices
A. demand
B. output prices
C. resource prices
Correct Answer: A
Classical economists believe that prices bring the economy to full employment.
User Contributed Comments 3
| User | Comment |
|---|---|
| examinee | Keynesian view is based on the demand side. |
| fuller | if demand changes, supply will change to bring an economy to equilibrium. |
| kuan | Actual expenditure is linked to aggregate demand. Where AE = output, there is equilibrium. Economy at equilibrium is not refering to the supply and demand equilibrium although they are connected. It is looking more into the potential of the economy given the amount of resources the economy has. |