Other things equal, an increase in aggregate spending tends to be associated with:
a. cost-push inflation.
b. an economic depression.
c. a lower level of equilibrium real GDP.
d. demand-pull inflation.
e. an increase in the quality of goods and services produced.
d
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According to Keynes, the classical model could not explain
A) a recession or depression. B) periods of rising unemployment. C) a long-term economic decline. D) periods of rising interest rates.
Which of the following is an example of a nation with a traditional economy?
a. the national government has mandated that 100,000,000 tons of butter be produced each year b. techniques used for growing wheat have been unchanged for centuries c. due to high fuel prices, many fuel-efficient cars are being produced d. economic authorities have ordered industry to produce tanks and heavy weaponry instead of food
Assume the Environmental Protection Agency imposes an excise tax on polluting firms. In which of the following situations would we expect the additional costs to be borne most heavily by consumers?
A. Demand is highly elastic and supply is highly inelastic. B. Demand and supply are both highly elastic. C. Demand and supply are both highly inelastic. D. Demand is highly inelastic and supply is highly elastic.
Classical economists believe that a market economy will normally
A. achieve full-employment output. B. suffer from extended periods of sustained unemployment. C. degenerate into pure monopolies in most industries. D. eliminate the problem of economic scarcity.