22) Using classical theory, an increase in the capital stock, other things equal, would cause 22)...

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Question

22) Using classical theory, an increase in the capital stock, other things equal, would cause 22)...

22) Using classical theory, an increase in the capital stock, other things equal, would cause 22) A) output to rise and price levels to fall B) output and prices to both rise
C) a decrease in equilibrium employment D) an increase in labor supply and output
23) In the classical model; an increase in government spending funded by borowing would 23)
1. A) increase demand for loanable funds, resulting in more consumption spending
2. B) induce households to save more and firms to invest more.
3. C) cause private sector spending to decrease by an amount equal to the increase in government spending
4. D) increase aggregate demand and equilibrium output.

business economics

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Answer 1

Answer #1

22. Option A

Explanation: An increase in the capital stock increases output due to higher production. This results in a fall in the price.

23. Option C

Explanation: Government borrowing leads to higher interest rates and this lowers private borrowing and investment.

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Answer 2

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