Why Is It Unlikely That Expansions Could Be Explained by a Decrease

question 27

Multiple Choice

Why is it unlikely that expansions could be explained by a decrease in labor demand in the classical model?

• A) It would be hard to say why productivity decreases.
• B) Productivity increases are too fast and variable to explain expansions.
• C) Productivity tends to improve at a constant and steady rate.
• D) Only unexplained spending changes can lead to changes in output and employment,not the other way around.
• E) Productivity improvements are rather slow.