According to Keynesian business cycle theory,. X the procyclical movement of investment is well explained when shocks to durable goods are themselves a main source of the cycle (so-called "animal spirits"), but not when cycles are caused by fluctuations in the LM curve inflation is procyclical and leading beneficial aggregate demand shocks, regardless of whether they shift the IS curve or the LM curve, will increase both output and the real interest rate the procyclical behavior of labor productivity occurs due to firms' labor hoarding practices