According to Classical Theory, If the Aggregate Demand Curve Decreased

question 72

Multiple Choice

According to classical theory, if the aggregate demand curve decreased and the economy experienced unemployment, then:

• A) the economy would remain in this condition indefinitely.
• B) the government must increase spending to restore full employment.
• C) prices and wages would fall quickly to restore full employment.
• D) the supply of money would increase until the economy returned to full employment.

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Definitions:

Oligopoly

represents a market structure with a small number of large firms dominating the industry, leading to potential collaboration and less competitive market conditions.

Total Revenue

The total amount of money received by a company from selling its goods or services before any costs or expenses are deducted.

Upsloping Line

In economics, represents a graph where the value or quantity increases as another variable increases, often seen in supply curves.

ATC Curves

Graphs that depict the average total costs of production at different levels of output, illustrating economies or diseconomies of scale.