The paper presents a model showing that changes in what people expect about how well the economy is doing can cause ups and downs in business cycles. When people get news that makes them think the economy will do better, it boosts output and jobs in the short term, but doesn't have lasting effects. Imperfect information means it takes time for the economy to adjust after good news, leading to temporary drops in inflation and employment. The model, when tested, accurately reflects the short-term ups and downs seen in real-world data due to these demand shocks.