According to the New Classical Model, Changes in Aggregate Demand

question 166

Multiple Choice

According to the new classical model, changes in aggregate demand change real GDP

• A) all of the time.
• B) only when the short-run aggregate supply curve is vertical.
• C) only when the changes in aggregate demand are expected.
• D) only when the changes in aggregate demand are unexpected.

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Definitions:

Tax

A binding monetary impost or other form of levy exacted upon a taxpayer by a governmental unit to finance the operation of the government and various public services expenses.

Sellers Receive

The amount of money that sellers are paid for their goods or services, after accounting for costs and expenses.

Tax Imposed

A compulsory financial charge or some other type of levy placed upon a taxpayer by a governmental organization to fund government spending and various public expenditures.

Consumer Surplus

The gap between what a consumer is prepared to spend on a good or service and the price they actually end up paying.