The Primary Factor That Caused Most Economists to Lose Their

question 22

Multiple Choice

The primary factor that caused most economists to lose their faith in the classical approach to macroeconomic policy was

• A)the high levels of unemployment that occurred during the Great Depression.
• B)the presence of both high unemployment and high inflation during the 1970s.
• C)the theoretical proof that classical ideas were invalid.
• D)the evidence that classical ideas were useful during economic booms, but not during economic recessions.

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Definitions:

Statement of Retained Earnings

A financial statement that summarizes the changes in retained earnings for a specific period, including net income, dividends paid, and adjustments.

Income Statement

A financial report summarizing revenues, expenses, and profits over a specified period, showing the financial performance of a company.

Statement of Cash Flows

A financial report that tracks the cash inflows and outflows from operating, investing, and financing activities over a period.

Statement of Cash Flows

A financial overview explaining how modifications in balance sheet accounts and income levels impact cash and cash equivalents, analyzed through operating, investing, and financing operations.