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The Short-Run Equilibrium in the Dynamic Model of Aggregate Demand

question 62

Multiple Choice

The short-run equilibrium in the dynamic model of aggregate demand and aggregate supply is determined by the intersection of the:


Definitions:

Laissez-Faire

The philosophy that the private economy should function without any government interference.

Classical Theory

An economic theory proposing that free markets can regulate themselves through the relationship of supply and demand without government intervention.

Interest Rate

The percentage charged on a sum of money borrowed or earned on a sum of money invested, typically expressed as an annual percentage rate.

Saving

The portion of income not spent on current consumption but set aside for future use, often put into investments or deposit accounts.

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