Question

meh talucquClass: Date: Sweet Sixteen Multiple Choice Identify the choice that best completes the statement or answer the question. 1. Classical economists believed that: a. price flexibility automatically directs market economies to full employment. b. budget deficits and surpluses were necessary for the control of economic fluctuations. c. market economies suffer prolonged periods of recessions and depressions d. market economies are inberently unstable because of fluctuating aggregate demand. 2. The popular theory prior to the Great Depression that the economy will automatically adjust to achieve full employment in the long run is: a. supply-side economics c. classical economics. b. Keynesian economics. d. mercantilism 3. The hands-off view of the classical school rests on which of the following two simple propositions about markets? a. Demand creates its own supply and markets are basically competitive. b. Industrial policy is inevitable and all prices are flexible. C. Market failure occurs and prices are rigid. d. Wages are sticky downward and market failure is inevitable. e. Markets are basically competitive and prices are flexible. 4. Consider the Keynesian consumption function. If disposable income is greater than the break-even level of disposable income, then households will be: a. investing e dissaving b. borrowing. d saving 5. If people's real assets increase, then the: a economy will move to the right along the existing consumption function. b, economy will move to the left along the existing consumption function c. consumption function will shift down. d. consumption function will shift up. e investment demand curve will shift up. 6. IFY $500 billion, autonomous consumption = $400 billion, and the marginal propensity to save then saving will equal: a. -$300 billion. b. $300 billion. c. $0. d. $80 billion. e. -S80 billion 0.20,

Answer 1

1.

A

As per the classical economists, there is a price and wage flexibility, that lead the economy to achieve full employment.

2.

C

It was classical economist views.

3.

E

It is the proposition thought by the classical economists.

4.

D

It will be saving, taking place.

5.

D