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| Topic: |
Business
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| Number of pages / Number of words: |
7 / 1688 |
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Their views were that monetary factors are the primary source of fluctuations in aggregate demand. They claimed to have established a strong correlation between changes in the money supply and changes in economic activity. However, major recessions have been associated with absolute declines in the money supply and minor recessions with the slowing of the rate of increase in the money supply below its long-term trend...
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Lucas (1975) defined business cycles as ‘the serially correlated movements about trend of real output that are not explainable by movements in the availability of factors of production’. The equilibrium theory of this approach illustrate that economic agents react ideally to the prices they observe and markets continue to clear...
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