Economics For Today
10th Edition
ISBN: 9781337613040
Author: Tucker
Publisher: Cengage Learning
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Question
Chapter 26.A, Problem 10SQ
To determine
The classical policy when the economy operates above its potential real GDP.
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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 correct
From 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
Which of the following statements is inconsistent with Classical Theory?
A.The economy will eventually produce at the full-employment level of output.
B.The economy is self-regulating.
C.The economy has an environment of “invisible hand”.
D.The economy has inflexible wages and prices.
Chapter 26 Solutions
Economics For Today
Ch. 26.3 - Prob. 1.1YTECh. 26.3 - Prob. 2.1YTECh. 26.3 - Prob. 2.2YTECh. 26.A - Prob. 1SQPCh. 26.A - Prob. 2SQPCh. 26.A - Prob. 3SQPCh. 26.A - Prob. 4SQPCh. 26.A - Prob. 1SQCh. 26.A - Prob. 2SQCh. 26.A - Prob. 3SQ
Ch. 26.A - Prob. 4SQCh. 26.A - Prob. 5SQCh. 26.A - Prob. 6SQCh. 26.A - Prob. 7SQCh. 26.A - Prob. 8SQCh. 26.A - Prob. 9SQCh. 26.A - Prob. 10SQCh. 26.A - Prob. 11SQCh. 26.A - Prob. 12SQCh. 26.A - Prob. 13SQCh. 26.A - Prob. 14SQCh. 26.A - Prob. 15SQCh. 26 - Prob. 1SQPCh. 26 - Prob. 2SQPCh. 26 - Prob. 3SQPCh. 26 - Prob. 4SQPCh. 26 - Prob. 5SQPCh. 26 - Prob. 6SQPCh. 26 - Prob. 7SQPCh. 26 - Prob. 8SQPCh. 26 - Prob. 9SQPCh. 26 - Prob. 10SQPCh. 26 - Prob. 11SQPCh. 26 - Prob. 12SQPCh. 26 - Prob. 1SQCh. 26 - Prob. 2SQCh. 26 - Prob. 3SQCh. 26 - Prob. 4SQCh. 26 - Prob. 5SQCh. 26 - Prob. 6SQCh. 26 - Prob. 7SQCh. 26 - Prob. 8SQCh. 26 - Prob. 9SQCh. 26 - Prob. 10SQCh. 26 - Prob. 11SQCh. 26 - Prob. 12SQCh. 26 - Prob. 13SQCh. 26 - Prob. 14SQCh. 26 - Prob. 15SQCh. 26 - Prob. 16SQCh. 26 - Prob. 17SQCh. 26 - Prob. 18SQCh. 26 - Prob. 19SQCh. 26 - Prob. 20SQ
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Similar questions
- Which of the following is not correct about the Classical economists’ argument? - They believe that the aggregate supply curve is vertical. - They tend to be more concerned about inflation. - They advocate the use of fiscal policy to stabilize the economy. - They believe the problem of unemployment will be fixed when the market corrects itself.arrow_forwardIn the “Classical Theory of Inflation”, what determines the price level and the value of money? Explain using a supply and demand plot.arrow_forwardAccording to classical economic theory, which of the following describes the potential long-run self-correction of the economy depicted in the graph above? a. Consumption will come out of its stagnation and shift AD to the right, bringing output back to full employment levels. b. Wage rates will increase, attracting labor back to full employment levels ans increasing output back to its natural rate. c. Long-run aggregate supply will shift left due to decreases in spending and restore long-run equilibrium. d. Nominal wages will decrease as the duration of unemployment extends, eventually shifting short-run aggregate supply to the right, bringing output back to its natural level. e. Economies do not self-correct.arrow_forward
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