To ensure the best experience, please update your browser. According to Smith, trade is the driving force of a nation’s wealth, rather than gold. If Congress increases government spending, it is using, Government policies regarding taxes and expenditures are called, The government implements fiscal policy when it changes, The government wants to encourage consumer spending through cutting income taxes. It doesn't need the king or a board of trade to decide what prices should be or what products are for sale. Promissory notes issued by the federal government when it borrows money are known as, A promissory note issued by a corporation when it borrows money is a. D) will never be at full employment. Economists say the book triggered the birth of classical economics. the classical believed recessions were ___ temporary. B) has sticky prices in many industries. If the labor force is 50 million and 48 million are employed then the unemployment rate is: If 20 million workers are unemployed and 180 million workers are employed, then the unemployment rate is, The period in the business cycle from a trough to peak is called a(n), If output is rising and unemployment is falling, the economy MUST be in a(n), The period in the business cycle from a peak to a trough is a(n). c. the price level, but not real GDP. C. wages fall enough to eliminate unemployment. According to the classical economists, unemployment was a temporary deviation from equilibrium, and certain forces in the economy would return it to full employment. In a business cycle, a peak represents the end of. practice a laissez faire policy approach. a. high taxes b. low taxes c. government spending to increase demand . The name draws on John Maynard Keyness evocative contrast between his own macroecon… 222.According to classical economists, the aggregate supply curve is _____, but according to Keynes, it is _____. Which part of real GDP fluctuates most over the course of the business cycle? According to classical economic theory there is no government intervention and the people of the economy will allocate scare resources in the most efficient manner to meet the needs of individuals and businesses. Which of the following is most commonly used to monitor short-run changes in economic activity? According to the Classical economists, the economy. Which of the following is NOT a topic studied in Macroeconomics? School United States Air Force Academy; Course Title BUSINESS 707; Uploaded By penelopegerhard; Pages 70; Ratings 100% (11) 11 out of 11 people found this document helpful. In a business cycle, a peak represents the end of ________ and a trough represents the end of ________. During the U.S. recession of 1980-1982, the unemployment rate reached a high of ________ percent. Which of the following would explain wage rigidities? The classical model is appropriate for analysis of the economy in the, The quantity of money has no real impact on things people really care about like whether or not they have a job. These economists produced a theory of market economies as largely self-regulating systems, governed by … Most economists use the aggregate demand and aggregate supply model primarily to analyze. c. According to the classical model, which of the following would double if the quantity of money doubled? Which of the following statements is correct? view the full answer. According to classical economics: real GDP is determined by aggregate supply, while the equilibrium price level is determined by aggregate demand. the classical economists believed _____ both wages and prices were downwardly flexible. B) the Great Depression. B) the labor demand does not change in the economy. 23. The new classical macroeconomics is a school of economic thought that originated in the early 1970s in the work of economists centered at the Universities of Chicago and Minnesotaparticularly, Robert Lucas (recipient of the Nobel Prize in 1995), Thomas Sargent, Neil Wallace, and Edward Prescott (corecipient of the Nobel Prize in 2004). If Juanita purchases a share of stock for $20 and three years later sells it for $120, she will realize a A) dividend of $100. Question: According To Classical Economists, Aggregate Demand Primarily Determines : A) Levels Of National Output And Income B) Total Production In The Economy C) Aggregate Supply At Full Employment D) The Price Level. During recessions declines in investment account for about, The classical dichotomy refers to the separation of, According to classical macroeconomic theory, changes in the money supply affect. A. requires fine-tuning to reach full employment. A relaively mild period of falling incomes and rising unemployment is called a, During a recession the economy experiences, When we say that economic fluctuations are "irregular and unpredictable," we mean that. D) interest rates always change to insure equilibrium in the money market. - The market is perfect and sustaining. The ________ can change the quantity of money in the economy. john maynard keynes. In the circular flow diagram, firms ________ labor and households ________ goods and services. D. taxes are cut enough to stimulate private spending. According to Neo Classical economists, a way to stimulate economic growth of the nation is charging low taxes. Classical economists stress the importance of this type of unemployment. REF: SECTION: 1 OBJ: TYPE: 2 9. According to Neoclassical economists the following is a means to stimulate economic growth? According to the classical economists an economy producing $ and services Student Response Value A.may be producing too much since the needs of people may not be this great. In the U.S. economy, the inflation rate in 1975 peaked at ________ percent. c. saving may be less than investment. In which of the following markets are funds demanded and supplied? If the traditional Keynesian views turn out to be accurate, an increase in government spending would: increase the equilibrium level of real GDP. Rapid increases in the price level during periods of recession or high unemployment are known as, Stagflation occurs when the economy's inflation rate is high and, Related to the Economics in Practice on p. 97 [409]: F. Scott Fitzgerald's The Great Gatsby is set in the "Roaring '20s". Classical economics came of age during and after industrilisation. QUESTION 30 According to Classical economists, why were flexible wages and prices" good or bad for the economy? During recessions which type of spending falls? Which of the following would be an example of fine tuning? D. will never be at full employment. New classical economists criticized this tradition because it lacks a coherent theoretical explanation for the sluggish behavior of prices. A year later the stock is valued at $18,000. During this time, the U.S. economy was primarily in the ________ phase of the business cycle, culminating in the Great Depression. According to the classical model, which of the following would double if the quantity of money doubled? Which of the following statements is FALSE? Eight months later there still has been no change in corn prices. Student Response Value necessary to purchase $8 trillion in goods and services. However, Keynesian economists argue it is not as straightforward. Previous question Next question Transcribed Image Text from this Question. Which of the following is not included in aggregate demand. b. real GDP but not the price level. Related to the Economics in Practice on p. 97 [409]: John Steinbeck's The Grapes of Wrath is set in the early 1930s. c. changes in the money supply cause changes in velocity. - Government intervention can only be a detriment to the economy. Can affect real GDP in the short run, but not the long run C. Can affect real GDP in both the short run and the long run D. Have no impact on real GDP in either the short run or the long run I chose C, is that right? It doesn't rely on generosity or compassion to operate; it produces good results because good results are in everyone's self-interest. Instead of selling the stock, Ami held onto it for another year. See the answer. Unemployment generally ________ during recessions and ________ during expansions. Keynesian view on classical unemployment. C. Macroeconomic policies became more influenced by Keynes' theories starting with, A) the period of high unemployment and high inflation in the 1970s. According to Classical economists in the 1930s, a recession will end when: A. government creates enough jobs for all of the unemployed. According to classical economists a. prices are rigid. Classical economists assume that the most important factor in a product's price is its cost of production. They both freely agree to exchange things of value because they can see a pr… 19. C) is self-correcting. On the other hand, an increase in aggregate demand causes the price level to _____ in the long run. According to Classical economists, excessive unemployment does not persist in the economy because A) wages will always adjust to ensure equilibrium in the labor market. An increase in the value of an asset over the price initially paid for it is a, If Tomas purchases a share of stock for $150 and one year later sells it for $225, he will realize a. C. could experience a permanent glut if no one has estimated the demand for goods and services in … Macroeconomic policies became more influenced by Keynes' theories starting with, 20. Neoclassical economists argue that the consumer's perception of … The Federal Reserve affecting the supply of money is known as, Policies designed to affect the quantity of money are, The diagram that shows the income received and payments made by each sector of the economy is the, In the circular flow diagram, the different payments made by firms to households include, A household that spends less than it receives in income during a given period is. Since 1970, the U.S. economy has experienced two A) periods of high inflation. C) the labor supply does not change in the economy. In a business cycle, a trough represents the end of A) an expansion. Which of the following typically rises during a recession? Since 1970, the U.S. economy has experienced four A) periods of high inflation. Ami purchased 100 shares of stock for $10,000. This is an example of. Due to these transactions. According to the Classical model, unemployment, According to Classical economists, if the quantity of labor demanded exceeds the quantity supplied, there is a. According to most economists, changes in the money supply: A. Which of the following is a CORRECT statement? ANS: D the velocity of money is constant. This is an example of a A), The demand for massage therapists declined in the spring of 2007, but the starting wages paid to massage therapists was still the same at the end of 2007. Which of the following is a topic studied in Macroeconomics? d. neither the price level nor real GDP. The portion of a corporation's profits that a firm pays out each period to its shareholders is a, To get the economy out of a slump, Keynes believed that the government should, To bring the economy out of an inflationary period, Keynes argued that the government should. Classical theory assumptions include the beliefs that markets self-regulate, prices are flexible for goods and wages, supply creates its own demand, and there is equality between savings and investments. Most economists would agree that this statement is appropriate concerning, Most economists believe that classical macroeconomic theory is a good description of the economy, Most economists believe that money neutrality holds, The model of short-run economic fluctuations focuses on the price level and, The variables on the vertical and horizontal axes of the aggregate demand and supply graph are, The model of aggregate demand and aggregate supply explains the relationship between. Prices in a classical economy are decided based on the raw materials used to produce, wages, electricity, and other expenses that have gone in to deriving an output finished … The thinking goes something like this: if competition is allowed to work, the economy will automatically gravitate towards full employment or what economists call 'potential output.' Classical economics focuses on the growth in the wealth of nations and promotes policies that create national economic expansion. This is an example of a, An increase in the overall price level is known as, A period of very rapid increase in the overall price level is known as, A period during which aggregate output rises is known as a(n), A period when the economy shrinks is known as. A. according to classical economists, market-driven economies. This problem has been solved! In the goods-and-services market, households, The demanders in the goods-and-services market are. 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