Answer
Option d is correct
i.e classical dichotomy
Because according to classical theory the nominal variables move in proportion to changes in the quantity of money e while real variables such as GNP, employment real wage rate real rate of interest remain unaffected.
Question 9 The vertical aggregate supply curve of the classical model exemplifies which theory? liquidity theory...
QUESTION 7 The long run aggregate supply curve (LRAS) is vertical. What economic theory does this represent? o the liquidity theory O a liquidity trap O the classical dichotomy O constant returns to scale QUESTION 8 Why might prices be inflexible in the short run? O sticky wages O sticky prices O missperceptions o all of the above
In the short run the classical production function is concave. What property best explains why? a diminishing marginal returns b the classical dichotomy c crowding out d constant returns to scale 2. Which of the following will shift the aggregate demand curve in the classical model? a an increase in investor bearishness b an increase in government spending c a decrease in taxes d an increase in the money supply 3. Laissez-fair doctrine is interpreted as? a government management is...
The classical dichotomy and monetary neutrality are represented graphically by an upward-sloping short-run aggregate-curve. a vertical long-run aggregate-supply curve. an upward-sloping long-run aggregate-supply curve. a downward-sloping aggregate-demand curve.
The long-run aggregate supply curve Group of answer choices is a graphical representation of the classical dichotomy. indicates monetary neutrality in the long run. is vertical All of the above are correct.
EQUILIBRIUM OUTPUT AND EMPLOYMENT 1. Derive the aggregate supply curve in the classical case. (Draw on the critical assumptions of classical economists in your explanation). 2. Within the classical model, analyze the following changes to the output equilibrium, price, real wage and employment: (a) decrease in technology (b) influx of foreign workers (c) decrease in money supply. 3. What is the role of money supply in classical theory? If money supply declines, what are the effects on income and price?...
The pre-Keynesian or classical economic theory viewed the long-run aggregate supply curve for the economy to be: a. vertical at the full-employment level of real GDP. b. positively sloped at the full-employment level of real GDP. c. horizontal at the full-employment level of real GDP. d. backward bending at the full-employment level of real GDP.
The vertical classical aggregate supply curve reflects that A. nominal wages adjust proportionally with the price level. B. real wages are always the same. C. aggregate output is always the same. D. None of the above. E. Both b and c.
According to the classical model, if the government increases spending by $60 billion which of the following will be the result? total aggregate expenditure will grow by $60 billion total aggregate expenditure will increase by a multiple of $60 billion total consumption and investment will fall by $60 billion net exports will rise by $60 billion Moving to another question will save this response.
The economic model of aggregate demand curve and aggregate supply curve helps explain the A. three goals of economic policy which are economic growth, high inflation, and full employment. B. expansion and contractions in individual markets. C. shifts in real GDP and the price level. Which of the following descriptions reflects the AD-AS model most accurately? A. Real GDP is shown on the vertical axis and the price level is shown on the horizontal axis. B. Aggregate supply is shown...
Question 8 The theory of liquidity preference implies that an increase in the price level shifts the Not yet answered Marked out of 2.00 Flag question Select one: a money demand curve to the right, so the interest rate decreases. b. money demand curve to the left, so the interest rate decreases. 0 C. money demand curve to the right, so the interest rate increases. 0 d. money demand curve to the left, so the interest rate increases. Question 9...