Since Classical Economists and Monetarists Believe That the Economy Operates

question 107

Multiple Choice

Since classical economists and monetarists believe that the economy operates at full employment, real GDP, that is, along the vertical segment of aggregate supply:

• A) any increase in the money supply can only end up raising the price level.
• B) any increase in the money supply can only end up lowering the price level.
• C) any decrease in the money supply can only end up raising the price level.
• D) changes in the money supply will not affect the price level.
• E) any increase in the money supply will cause both nominal and real GDP to increase.

---

Definitions:

Unconscious Drives

Deep-seated desires and motivations that influence behavior and thoughts without an individual's conscious awareness.

Classical Conditioning

A learning process that occurs when two stimuli are repeatedly paired; a response that is initially elicited by the second stimulus is eventually elicited by the first stimulus alone.

Operant Conditioning

A method of learning that occurs through rewards and punishments for behavior, encouraging the occurrence of desired behaviors.

Reciprocal Determinism

A perspective positing that individuals and their environment interact and influence each other.