If the economy were left on its own without the interference of government or the Fed, it would move toward an equilibrium rate of growth that would produce, with only minor interruptions, full employment without inflation. What school supports this view?
A. Classical.
B. Keynesian.
C. Monetarism.
D. Supply-side.
Answer: A
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Any production point outside the production possibilities frontier is
A) unattainable. B) associated with unused resources. C) attainable only if prices fall. D) attainable only if prices rise.
Which of the following is an example of productive inefficiency?
a. Scientists discover a new substance that dramatically increases potential steel production. b. A demographic boom leads to a rise in the number of workers in the labor force. c. The rate of unemployment falls to zero. d. Computer technicians are forced to answer telephones rather than perform their normal duties. e. Due to economic growth, the economy reaches a new point along its production possibilities frontier.
If inflation is less than expected, who is wealth redistributed to?
The demand for food is price-inelastic.
Answer the following statement true (T) or false (F)