A Fundamental Feature of Early Classical Macroeconomics Is That

question 127

Multiple Choice

A fundamental feature of early classical macroeconomics is that:

• A) aggregate demand and aggregate income are usually unequal.
• B) prices of inputs and outputs are usually relatively rigid.
• C) the economy's level of employment can remain substantially below its natural level over a long period.
• D) the economy can achieve full employment on its own, though there may be short periods in which employment falls below the natural level.

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Definitions:

Average Total Cost

The total cost per unit of output, calculated by dividing the total cost of production by the number of units produced.

Marginal Cost Curve

A graph that shows the change in the total cost of producing one additional unit of a good or service.

Diminishing Marginal Product

The principle that as additional units of a variable input are added to a fixed input, the additional output produced from each new unit decreases.

Marginal Cost Curve

A graphical representation showing how the cost to produce one additional unit of a product changes as production volume increases.