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:

Labor Force

The total number of people who are both employed and actively seeking employment.

Actively Looking

The process in which individuals engage in a diligent search for employment or opportunities, often involving submitting applications and attending interviews.

Supply-Side Shocks

Unexpected events that affect the supply side of the economy, causing shifts in cost and availability of goods and services.

OPEC Policies

OPEC policies are strategies and guidelines adopted by the Organization of Petroleum Exporting Countries to regulate the oil supply in the global market to stabilize oil prices.