Which of the Following Is an Implication of the Classical

question 59

Multiple Choice

Which of the following is an implication of the classical model?

• A) The supply of loanable funds curve is downward sloping.
• B) The inflation rate is constantly rising.
• C) Fiscal policy only changes the amount of consumption,investment and government spending,not the amount of output produced.
• D) Monetary policy can change both the interest rate and real output.
• E) The interest rate can only be changed by monetary policy,not by changes in government spending.

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Definitions:

Lockup Agreement

A contract between a company's insiders and underwriters that prohibits the sale of shares for a specified period following an initial public offering.

Greenmail

A tactic where a company buys back its own shares at a premium from a hostile party to prevent a takeover.

Target Management

The process of identifying, organizing, and prioritizing business objectives and key performance indicators to achieve strategic goals.

White Knight

A post-offer technique where a target company invites another suitor to outbid a hostile bidder. The second suitor agrees that it will retain the existing management.