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:

Social Security System

A government program designed to provide financial support to people in retirement, disability, or to survivors, funded through payroll taxes.

Unemployment Benefits

Payments made by the government or a private entity to individuals who are unable to find employment.

SNAP Benefits

Financial assistance provided through the Supplemental Nutrition Assistance Program to eligible low-income individuals and families for purchasing food.

Comprehensive Income

The total change in equity for a business enterprise during a period from transactions and other events from non-owner sources.