According to the New Classical View, Aggregate Output Will Differ

question 74

Multiple Choice

According to the new classical view, aggregate output will differ from full-employment output

• A)whenever saving does not equal investment.
• B)only if the actual price level does not equal the expected price level.
• C)only if the federal government's expenditures are greater than its tax receipts.
• D)whenever imports exceed exports.

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Definitions:

Self-correct

The ability of an economic market to adjust and return to equilibrium without external intervention.

Aggregate Demand Curve

Represents the total spending on domestic goods and services at various price levels, showing the inverse relationship between price level and demand.

Short-run Aggregate Supply

Represents the total amount of goods and services that producers are willing and able to supply at different price levels in the short-term, considering some prices are sticky.

Passive Policy

A government or regulatory approach that involves minimal intervention in the economic affairs of individuals and businesses.