Business cycle theory that combines classical is-lm model

Reference no: EM131131332

Consider a business cycle theory that combines the classical IS-LM model with the assumption that temporary changes in government purchases are the main source of cyclical fluctuations. How well would this theory explain the observed cyclical behavior of each of the following variables? Give reasons for your answers.

a. Employment

b. The real wage

c. Average labor productivity

d. Investment

e. The price level

Reference no: EM131131332

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