Classical Economists Believe That When Aggregate Demand Changes,the Economy Remains

question 143

Multiple Choice

Classical economists believe that when aggregate demand changes,the economy remains at full employment because

• A) changes in aggregate demand do not affect prices.
• B) prices are very flexible.
• C) the government requires that the economy perform at full employment.
• D) international trade offsets any changes in demand.
• E) consumers and producers are not a part of aggregate demand.

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Definitions:

Dividend Payout Ratio

The percentage of earnings paid to shareholders in dividends, used to measure the extent to which a company returns profits to its shareholders.

Fixed Assets

Long-term tangible assets that a company owns and uses in its operations to generate income, such as buildings, machinery, and equipment.

Sales Increase

A situation where a company experiences a rise in the volume or value of its product sales over a particular period.