Which of the Following Is True in the Classical Model

question 37

Multiple Choice

Which of the following is true in the classical model?

• A) A spontaneous increase in spending can cause an increase in output and employment.
• B) An increase in output and employment can cause a decrease in spending.
• C) A spontaneous decrease in spending can cause an increase in output and employment.
• D) An increase in output and employment can cause an increase in spending.
• E) A spontaneous decrease in spending can cause a decrease in output and an increase in employment.

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Definitions:

Liquidity

The ease with which assets can be converted into cash without significantly affecting their price.

Accounts Payable

Liabilities of a business representing money owed to creditors for purchases of goods and services made on credit, expected to be paid off within a year.

Cash Sales Policy

A company's practice of selling products or services for cash, rather than extending credit to customers.