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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