According to Classical Economists, Excessive Unemployment Does Not Persist in the Economy

question 209

Multiple Choice

According to classical economists, excessive unemployment does not persist in the economy because

• A) wages will always adjust to ensure equilibrium in the labor market.
• B) the labor demand does not change in the economy.
• C) the labor supply does not change in the economy.
• D) interest rates always change to insure equilibrium in the money market.

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Definitions:

Tax Rate

The proportionality of income subject to tax for either a person or a business.

Discount Rate

This refers to the interest rate applied for computing the present value of forthcoming cash flows in the context of discounted cash flow analysis.

Present Value

The current valuation of future monetary sums or cash flow streams, using a given return rate for discounting.

Capital Cost Allowance (CCA)

A taxable expense in Canada that a business can claim for the depreciation of tangible property.