Which of the Following Policy Statements Would a Classical Economist

question 145

Multiple Choice

Which of the following policy statements would a classical economist tend to support?

• A) The government should be prepared to intervene when aggregate demand changes in any way.
• B) The government should only intervene in the economy when aggregate demand decreases.
• C) The government should allow the economy to adjust to changes in aggregate demand on its own,without interference.
• D) The government should frequently change taxes and spending levels to manipulate the economy.
• E) The government should only intervene in the economy when aggregate demand increases.

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Definitions:

Expected Utility

Sum of the utilities associated with all possible outcomes, weighted by the probability that each outcome will occur.

Income

The money a person or business receives in exchange for providing a good or service or through investing capital.

Research

The systematic investigation into and study of materials and sources to establish facts and reach new conclusions.

Standard Deviation

A statistical measure of the dispersion or variability of a set of numbers, showing how much variation exists from the average.