New Classical Economists Say That an Unanticipated Increase in Aggregate

question 85

Multiple Choice

New classical economists say that an unanticipated increase in aggregate demand first:

• A) increases the price level and real output,and then reduces short-run aggregate supply such that the economy returns to the full-employment level of output.
• B) increases the price level and real output,and then increases long-run aggregate supply.
• C) increases long-run aggregate supply,and then increases the price level and real output.
• D) reduces short-run aggregate supply,and then reduces long-run aggregate supply.

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Definitions:

Common Stock

Equity ownership in a corporation, with voting rights and a residual claim on corporate earnings.

Treasury Stock

Stock that has been issued but has been bought back by the corporation or received as a gift.

Net Cash

Describes the amount of cash remaining after all cash expenditures, or disbursements, are subtracted from the cash receipts during a given period.

Indirect Method

A method used in accounting to calculate cash flows from operating activities, adjusting net income by changes in non-cash accounts.