The Classical Macroeconomic Model Argues That the Economy Has Built-In

question 203

Multiple Choice

The classical macroeconomic model argues that the economy has built-in forces that automatically eliminate unemployment and quickly move the economy to its full employment level of real GDP.Which assumption is critical to this argument?

• A)Rigid wages and prices
• B)Flexible wages and prices
• C)Natural rate of unemployment
• D)Profit motive
• E)None of the choices are correct.

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Definitions:

Fixed Ratio

A prescribed relationship between two quantities, expressed as a constant value.

Net Income

The total earnings of a company after deducting all costs and expenses from revenue, indicating the company's profitability.

Liquidation

The process of closing a business by selling its assets to pay off its liabilities, with any remaining proceeds distributed to shareholders or owners.

Income Statement

A financial statement that shows a company's revenues, expenses, and net income over a specific period of time.