If You Asked a Classical Economist Which Economic Time Frame

question 55

Multiple Choice

If you asked a classical economist which economic time frame he or she prioritized,how might he or she respond?

• A) "Prices tend to be sticky when supply or demand changes."
• B) "Savings is a drain on aggregate demand."
• C) "The economy tends toward instability and cyclical unemployment."
• D) "The long run is key."
• E) "The short run is key."

---

Definitions:

Real Exchange Rate

The rate at which two currencies can be exchanged for each other, adjusted for inflation, which represents the true purchasing power.

Inflation Rate

A rise in the cost percentage of goods and services in an economy during a certain period.

Depreciate

The gradual reduction in the economic value of tangible fixed assets due to wear and tear over time.

Euro

The Euro is the official currency of the Eurozone, used by 19 of the 27 European Union countries.