In the Classical Model,if Government Tries to Increase Employment and Output

question 147

Multiple Choice

In the classical model,if government tries to increase employment and output by increasing its own purchases,

• A) it will achieve its goal and economic conditions will improve
• B) it will not attain its objective unless it also decreases taxes
• C) its actions will cause the interest rate to rise,which will choke off investment spending
• D) firms will be motivated to increase their output,thereby creating even more jobs
• E) saving will also increase,as more people are employed

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Definitions:

Semiannually

Occurring or happening twice a year; every six months.

Face Value

The nominal value printed on a bond or share, distinct from its market value.

Par Value

The face value of a bond or stock, representing the amount the issuer agrees to pay at maturity (for bonds) or as an arbitrary value assigned to shares.

Debt Relationship

The connection between borrowers and lenders, specifying the terms under which debt capital is lent and must be repaid.