Early Classical Macroeconomics Was Based Largely on the Foundation of

question 44

Multiple Choice

Early classical macroeconomics was based largely on the foundation of

• A) flexible wages and prices.
• B) persistent unemployment.
• C) government intervention in the market.
• D) Adam Smith's model of imperfectly competitive markets.

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Definitions:

Federal Funds

Reserve balances that commercial banks hold at Federal Reserve Banks, often referred to in the context of the federal funds rate, which is the interest rate at which banks lend to each other overnight.

Income Tax

Tax levied by a government directly on income, including wages, salaries, and investments.

Constitution

The fundamental principles and established precedents according to which a state or other organization is governed.

Police Power

The power retained by each state to pass laws that protect the health, safety, and welfare of its citizens.