Prior to the 1970s, the Model of Choice Was the Aggregate

question 36

Multiple Choice

Prior to the 1970s, the model of choice was the aggregate expenditures model. According to
This model, if the economy was in equilibrium below full employment, then the primary economic problem would be

• A) unemployment.
• B) deflation.
• C) financing the government budget deficit.
• D) financing unemployment compensation.

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Definitions:

Price-taker Industry

Industries where firms have no control over the market price and must accept the prevailing prices as given.

Short-run Market Supply

The total quantity of goods or services that producers are willing and able to sell at a given price in the market over a short period.

MC Curves

A graphical representation of how the marginal cost of producing one additional unit of a good varies with the quantity produced.

Increasing Cost Industry

An industry where production costs increase as output expands, typically due to factors like resource depletion or increased expenses for inputs.