From the perspective of classical macroeconomic theory, an excess of aggregate spending would:
A. Increase aggregate output and the level of employment in the economy
B. Decrease the rate of interest and lower the level of investment
C. Increase consumption, and thus move the economy toward the full-employment level of
output
D. Increase prices, wages, and interest rates, and thus reduce aggregate spending to equal the full-employment level of output
D. Increase prices, wages, and interest rates, and thus reduce aggregate spending to equal the full-employment level of output
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The figure above shows Prakash's and Gail's production possibilities frontiers for writing books and magazine articles
a. What is Prakash's opportunity cost of a book? What is Gail's opportunity cost? Who has the comparative advantage in writing books? b. Who has the comparative advantage in writing magazine articles? c. According to their comparative advantages, who should write books and who should write magazine articles?
Assume that steak and potatoes are complements. When the price of steak goes up, the demand curve for potatoes:
A) shifts to the left. B) shifts to the right. C) remains constant. D) shifts to the right initially and then returns to its original position.
Which statement is true?
A. The firm is making a profit in the short run.
B. The firm is making a profit in the long run.
C. The firm is making a loss in the short run.
D. The firm is making a loss in the long run.
Which of the following is correct?
A. real interest rate = nominal interest rate / anticipated inflation rate B. real interest rate = nominal interest rate - anticipated inflation rate C. real interest rate = nominal interest rate * anticipated inflation rate D. real interest rate = nominal interest rate + anticipated inflation rate