Which of the of the Following Is a Basic Difference

question 295

Multiple Choice

Which of the of the following is a basic difference between the classical model and the Keynesian model in which the Keynesian short-run aggregate supply curve exists?

• A) The classical model assumes that the long run aggregate supply curve is vertical, while the Keynesian model assumes the long run aggregate supply curve is horizontal.
• B) The classical model assumes that the position of the long run aggregate supply curve is determined by full employment, while the Keynesian model assumes that the long run aggregate supply curve will be to the left of full employment.
• C) The classical model assumes that the level of real GDP is supply determined, while the Keynesian model assumes that it is demand determined.
• D) The classical model uses real GDP, while the Keynesian model uses nominal GDP.

---

Definitions:

Subjective Method

A method of assigning probabilities on the basis of judgment.

Probabilities

Measures of the likelihood that an event will occur, expressed as a number between 0 and 1.

Probability Values

Numerical values that represent the likelihood of the occurrence of a specific event or outcome.

Mutually Exclusive

Two or more events that cannot happen at the same time; the occurrence of one event precludes the occurrence of the other(s).