Classical Economists Oppose Government Intervention in the Economy for All

question 14

Multiple Choice

Classical economists oppose government intervention in the economy for all the reasons below except that

• A)policies to smooth out the business cycle are undesirable in principle.
• B)increased government expenditures will lower the real wages of workers.
• C)government policy is incapable of smoothing out the business cycle.
• D)increases in government spending cannot increase the level of output and employment in the economy.

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Definitions:

Financing

The process of providing or securing funds for business activities, making purchases, or investing.

Investing

The act of allocating resources, often financial, in hopes of generating an income or profit.

Statement of Cash Flows

A financial statement that summarizes the cash inflows and outflows for a company over a period, showing how changes in balance sheet and income affect cash and cash equivalents.

Financing Activity

Activities that result in changes in the size and composition of the equity and borrowings of a company.