When Other Things Are Equal and Using the Classical Model

question 168

Multiple Choice

When other things are equal and using the classical model, an increase in the money supply leads to an equal proportional _____ in the aggregate _____, with no effect on aggregate _____.

• A) rise; output; price level
• B) fall; price level; output
• C) rise; price level; output
• D) fall; output; price level

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Definitions:

Long Run

A period of time in which all factors in a production process can be varied, allowing for the adjustment to changes in market or economic conditions.

Economic Power

The ability of an entity or country to influence or control economic activities, including production, trade, and consumption.

Political Power

Political power is the capacity or ability of a political entity, such as a state or government, to control or influence the behavior of individuals and organizations within a society.

Natural Monopolies

Industries where a single firm can supply a good or service to an entire market at a lower cost than would be possible if there were multiple firms.