Which of the Following Real-World Phenomena Does the Classical Model

question 142

Multiple Choice

Which of the following real-world phenomena does the classical model ignore?

• A) Frictional unemployment
• B) Inflation
• C) Real output growth
• D) Cyclical unemployment
• E) Structural unemployment

---

Definitions:

Federal Funds Market

A market where banks lend and borrow reserves from each other overnight in order to meet reserve requirements set by the central bank.

Depository Institution

A financial institution legally allowed to accept monetary deposits from consumers, such as banks and credit unions.

Federal Home Loan Bank Board

A now-defunct U.S. government agency that oversaw the Federal Home Loan Banks, which were created to support home mortgage lending and community investment.

Required Reserve Ratio

The fraction of deposits that banks are required to hold in reserve and not lend out, as dictated by central banking authorities.