According to the New Classical Theory,if the Public Correctly Anticipates

question 126

Multiple Choice

According to the new classical theory,if the public correctly anticipates a government policy to increase aggregate demand,then

• A) there will be a short-run tradeoff between inflation and unemployment,but there will not be a long-run tradeoff.
• B) there will be a long-run tradeoff between inflation and unemployment,but there will not be a short-run tradeoff.
• C) there will be both a long-run and a short-run tradeoff between inflation and unemployment.
• D) there will be neither a long-run nor a short-run tradeoff between inflation and unemployment.
• E) there may be a short-run tradeoff between inflation and unemployment,but one cannot say for certain whether there will be a long-run tradeoff.

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Definitions:

Inflow of Cash

The total amount of money coming into a company, typically from operations, investments, and financing.

Statement of Cash Flows

A financial statement that provides aggregate data regarding all cash inflows and outflows a company receives from its ongoing operations, investment, and financial activities.

Issuance of Long-Term Debt

The process by which a company borrows money from financial institutions or through the sale of bonds, agreeing to repay the principal, along with interest, over a period longer than one year.

Free Cash Flow

The amount of cash generated by a business after accounting for capital expenditures, indicating the financial health and liquidity.