According to classical theory, if the aggregate demand curve decreased and the economy experienced unemployment, then:
A. the economy would remain in this condition indefinitely.
B. the government must increase spending to restore full employment.
C. prices and wages would fall quickly to restore full employment.
D. the supply of money would increase until the economy returned to full employment.
Answer: C
You might also like to view...
Robert decides not to attend a showing of the newest Star Wars movie when the price of a ticket is $10. From this, we can conclude that seeing the movie is
A. worth less than 1,000 utils to Robert. B. worth $8 to Robert. C. was worth less than $10 worth of other goods for Robert. D. something that Robert would never do.
Refer to the information provided in Figure 16.4 below to answer the question(s) that follow.Los Angeles International Airport (LAX) is located next to Playa Del Rey. The noise from air traffic negatively affects individuals living in Playa Del Rey, however, this cost is not considered by airlines or air travelers. The airlines feel they have a right to use the airspace while the individuals living in Playa Del Rey feel they have the right to quiet. The following diagram depicts the marginal costs and marginal benefits associated with air travel.
Figure 16.4Refer to Figure 16.4. Suppose the government assigns property rights to the residents of Playa Del
Rey, then the airlines and the residents engage in negotiations. The ________ of air travel is 100 units. A. resulting efficient level B. government-regulated level C. maximum allowable level D. minimum allowable level
Which of the following factors will not affect the profit expectations of business firms and change the level of investment?
a. Entry of new firms into the market b. Introduction of new taxes c. Announcement of new government subsidies d. The current level of GDP e. The marginal propensity to consume
Frank Knight said that profit
A. is indistinguishable from risk. B. exists when the probability of a given event cannot be predicted reliably. C. can be incorporated into the cost structure of production. D. forces entrepreneurs to make unwise decisions with imperfect information.