Which of the Following Statements Best Characterizes the Classical View

question 5

Multiple Choice

Which of the following statements best characterizes the Classical view of business cycles?

• A)Fluctuations in business activity occur in regular and predictable patterns.
• B)Fluctuations in business activity are to be expected and should be accepted.
• C)Business cycles are symptoms of underlying problems and should be addressed by macroeconomic policy.
• D)The appropriate macroeconomic policy can eliminate fluctuations in business activity.

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Definitions:

Saving

The portion of income not spent on consumption, often set aside for future investments or expenditures.

Disposable Income

The amount of money individuals or households have available to spend or save after taxes have been accounted for.

Saving

The portion of income that is not spent on consumption but instead is set aside for future use or investment.

Disposable Income

Income left for households to direct into savings and spending after deductions of income taxes.