The Figure Given Below Represents the New Classical Long Run

question 24

Multiple Choice

The figure given below represents the new classical long run and short run Phillips curve measuring inflation rate on vertical axis and unemployment rate on horizontal axis.
Figure 15.2

-Refer to the Figure 15.2. Assume the economy is currently at point C. According to the new classical school, an expected increase in government spending:

• A) would move the economy to point A.
• B) would move the economy to point B.
• C) would move the economy to point D.
• D) would move the economy above point A.
• E) would move the economy below point C.

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Definitions:

Credit Extending

The practice of allowing a customer to purchase goods or services on account, paying for them at a later date.

Retailer

A business entity that sells goods or services directly to consumers, typically through brick-and-mortar stores or online platforms.

Information Databases

Structured sets of data held in a computer system, allowing for easy access, management, and update of information.

Credit Terms

Conditions under which credit will be extended to a borrower, including repayment schedule, interest rate, and the timeframe of the loan.