Classical Economists Believed

question 9

Multiple Choice

Classical economists believed
I. there could be temporary periods of unemployment.
II. emphasis should be placed on the long run, and in the long run all would be set right because of the smooth functioning of the price system.
III. the Great Depression would be a short-run aberration.

• A) I only
• B) I and II only
• C) II only
• D) I, II, and III

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Definitions:

Explicit Costs

Direct, out-of-pocket payments for inputs or resources used in the production of goods or services.

Uninsurable Risk

An eventuality for which the frequency or magnitude of potential losses is unpredictable or unknowable. Insurance companies are not willing to sell insurance against such risks.

Consumer Tastes

The preferences and inclinations of consumers regarding different products and services, which can shift over time affecting market demand.

Wages and Salaries

Payments made to employees for their labor or services, typically on an hourly, daily, or yearly basis.