New Classical Economists Argue That Unless People Are Taken by Surprise

question 112

Multiple Choice

New classical economists argue that unless people are taken by surprise, a decrease in aggregate demand will cause

• A) an increase in the price level and unemployment.
• B) a decrease in the price level and employment.
• C) an increase in the price level and no change in employment.
• D) a decrease in the price level and no change in employment.

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Definitions:

Bushel

A measure of volume that is used primarily for agricultural crops, with the exact measurement differing by product.

Bananas

A type of elongated, edible fruit produced by several kinds of large herbaceous flowering plants in the genus Musa.

Comparative Advantage

The ability of a country or firm to produce a particular good or service more efficiently than other goods or services, relative to other countries or firms.

Opportunity Cost

The sacrifice of potential advantages from different alternatives when opting for a particular one.