Classical Economists Believe That

question 255

Multiple Choice

Classical economists believe that:

• A)the long-run aggregate supply curve is vertical, but the short-run aggregate supply curve is horizontal.
• B)fiscal policy changes are best at controlling the business cycle.
• C)increases in the money supply will increase output.
• D)prices are flexible.

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Definitions:

Bond Interest

The regular payments made to bondholders as compensation for the investment, typically expressed as a percentage of the principal.

Dividends

Disbursements issued to shareholders by a company, typically sourced from the firm's earnings.

Corporation

A legal entity that is separate and distinct from its owners, who are shareholders. The corporation itself can own assets, borrow money, sue or be sued.

Debt-To-Equity Ratio

It's a financial indicator that compares the proportions of debt and shareholders' equity in funding company assets.