Mainstream Economists Question the New Classical Assumption That

question 102

Multiple Choice

Mainstream economists question the new classical assumption that

• A)excessive growth of the money supply is a cause of inflation.
• B)the price level is determined by aggregate demand and aggregate supply.
• C)demand creates its own supply.
• D)wages and prices are equally flexible upward and downward.

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Definitions:

Units

Basic quantities or measurements used to express variables, stock, or outputs in any kind of scientific, economic, or engineering calculations.

Edgeworth Box

A diagram used in economics to show the distribution of resources between two individuals, illustrating how trade can lead to an efficient allocation.

Pareto Optimal Allocations

A situation where resources in an economy are allocated in such a way that it is impossible to make any one individual better off without making at least one individual worse off.

Trade

The exchange of goods, services, or both between two or more parties.