The Pre-Keynesian or Classical Economic Theory Viewed the Long-Run Aggregate

question 61

Multiple Choice

The pre-Keynesian or classical economic theory viewed the long-run aggregate supply curve for the economy to be:

• A) horizontal at the full-employment level of real GDP.
• B) positively sloped at the full-employment level of real GDP.
• C) vertical at the full-employment level of real GDP.
• D) backward bending at the full-employment level of real GDP.

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Definitions:

Vertically Integrated

A company structure where the company owns its supply chain, from raw materials to the sale of the finished product, to control costs and quality.

Expected Profit

The forecasted amount of profit calculated by multiplying potential outcomes by their probabilities of occurrence.

Expected Profit

The anticipated financial return from an investment or business activity, considering potential risks and earnings.

Optimal Quantity

The most favorable amount of goods or services, determined through analysis, to meet specific objectives like minimizing costs or maximizing profit.