The vertical long-run aggregate supply curve satisfies the elassical dichotomy because the natural rate of output does not depend on: technology. the supply of capital. the money supply. the labour supply.
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- Which of the following is a belief of classical theory? A. Long-run full employment B. Inflexible wages C. Inflexible prices D. All of the above answers are correctthe aggregate supply curve a. shows the level of real GDP produced in the economy at different possible price levels during a period of time b. is horizontal in the Keynesian range c. is vertical in the classical range d. all of theseConsider the neo-classical approach to macroeconomics. Given there is a recessionary period, that theory suggests that, given some time ... Group of answer choices a. The AD line will shift right b. The AS line will shift left c. The AD line will shift left d. The AS line will shift right
- Suppose labor demand decreases because of negative supply shock. How would you expect such a change to affect output, employment, and the real wage in the classical model?The AD/AS model is static. It shows a snapshot of the economy at a given point in time. Both economic growth and inflation are dynamic phenomena. Suppose economic growth is 3% per year and aggregate demand is growing at the same rate. What does the AD/AS model say the inflation rate should be?Which of the following best differentiates the Keynesian View from the Classical View? The Classical View contains a SRAS curve while the Keynesian View does not include a SRAS curve. The Classical View only pertains to the short run while the Keynesian View only pertains to the long run. The Classical View only pertains to the long run while the Keynesian View pertains to both the short run and the long run. The Classical View contains an aggregate demand curve while the Keynesian View does not.
- In the classical model, a decline in output in a recession: a) is temporary and will be quickly corrected. b) is usually the result of Say’s Law. c) is permanent and calls for active correction by government. d) is the result of the instability of investment.Long-run economic growth can be achieved with Group of answer choices A rightward shift in the aggregate demand curve. A rightward shift in the long-run aggregate supply curve. Neutral monetary policy. Contractionary fiscal policy.181.In June 2008 Zimbabwe had the world's highest unemployment rate. A)True B)False 182.In the classical model of the price level, there is NO distinction between the short run and the long run. A)True B)False 183.The short-run aggregate supply curve is positively sloped because wages and prices are not all completely flexible. A)True B)False 184.The classical model of the price level is more accurate during low inflation than high inflation. A)True B)False 185.An inflation tax is the effect on the public of a reduction in the value of money caused by inflation. A)True B)False 186.An inflation rate of 5% will increase the purchasing power of $1 to $1.10. A)True B)False 187.It is impossible for the U.S. government to raise revenue by printing more money because the Federal Reserve, not the Treasury, issues most of the U.S. money supply. A)True B)False 188.People can avoid the inflation tax by…
- Why do economists think the classical dichotomy holds in the long run?Government stabilization policy a. can stimulate aggregate demand, but only in the long run. b. can stimulate aggregate demand and thereby induce businesses to invest, but the amount is not totally predictable. c. can stimulate aggregate demand, but investment spending will not be affected. d. cannot influence investment spendingFrom 1990 to 1995, the U.S. economy was in a recessionary gap. According to the classical economists, which of the following should have occurred? Group of answer choices interest rates should have fallen which would increase consumer and investment spending prices should have fallen which would increase consumer spending all of the above should have occurred wages should have fallen which would cause more workers to be hired