An Important Distinction Between the Classical and Keynesian View of the Economy

question 100

Multiple Choice

An important distinction between the classical and Keynesian view of the economy is that

• A) Keynes stressed the supply side of an economy while classical economists stressed the demand side of the economy.
• B) classical economists argued that output gaps were caused by shifts in the long-run aggregate supply while Keynes' maintained that output gaps were created by shifts in aggregate demand.
• C) Keynes stressed the demand side of an economy while classical economists stressed the supply side of the economy.
• D) classical economists argued that output gaps were caused by shifts in the long-run aggregate supply while Keynes' maintained that output gaps were created by wage and price rigidities.

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Definitions:

Assembly Line

A production process that breaks down a complex job into a series of smaller tasks, which are completed in a sequential manner.

Non-Manufacturing Costs

Expenses not directly related to the production of goods, such as administrative, marketing, and sales costs.

Manufacturing Overhead

All indirect costs associated with manufacturing, such as utilities, salaries of indirect labor, and equipment depreciation.

Manufacturing Overhead

All indirect costs associated with manufacturing, such as utilities, maintenance, and salaries of non-direct labor.