Those Who Believe in the Classical Model Suggest That Expansionary

question 210

Multiple Choice

Those who believe in the classical model suggest that expansionary policies would result in:

• A)increases in output and the aggregate price level.
• B)increases in output with no change in the aggregate price level.
• C)increases in the aggregate price level with no change in output.
• D)increases in unemployment and the output level.

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Definitions:

Wage Rate

The amount of compensation paid for labor services per unit of time (e.g., hour, day, or month).

Rental Rate

The price paid for the temporary use of a good, service, or property expressed typically as a daily, monthly, or yearly rate.

Minimum Cost

The lowest possible expense incurred in the production of a good or the provision of a service.

Output Levels

The quantity of goods or services produced by a firm, industry, or economy in a given period.