Which of the following is an assumption used by Classical economists? According to Smith, trade is the driving force of a nation’s wealth, rather than gold. Promissory notes issued by the federal government when it borrows money are known as, A promissory note issued by a corporation when it borrows money is a. Most economists use the aggregate demand and aggregate supply model primarily to analyze. Which of the following is NOT a topic studied in Macroeconomics? Which of the following is TRUE? Classical economists assume that the most important factor in a product's price is its cost of production. As Smith saw it, the … Instead of selling the stock, Ami held onto it for another year. according to keynes, when the economy falters the government should do any of the following except? This is an example of a A), The demand for massage therapists declined in the spring of 2007, but the starting wages paid to massage therapists was still the same at the end of 2007. c. the price level, but not real GDP. According to classical economists a. prices are rigid. Which of the following would be an example of fine tuning? C) is self-correcting. Due to these transactions, Mike purchased a 1968 Chevy Corvette in 2006 for $30,000 and a year later he sold it for $36,000. In the goods-and-services market, households, The demanders in the goods-and-services market are. according to classical economists, the relationship between the amount of funds firms plan to invest and the interest rate is. According to the Classical model, unemployment, According to Classical economists, if the quantity of labor demanded exceeds the quantity supplied, there is a. - The market automatically adjusts to "booms" and busts - Supply = Demand - Supply creates its own demand. Eight months later there still has been no change in corn prices. Start studying Chapter 9: Classical Economics. It has become conventional to classify an economic downturn as a recession when aggregate output declines for, If the labor force is 500 and employment is 450, then the unemployment rate is, Between a trough and a peak, the economy goes through a(n), Between a peak and a trough, the economy goes through a(n), Unemployment implies that in the labor market. Macroeconomic policies became more influenced by Keynes' theories starting with, 20. Which of the following is correct concerning recessions? practice a laissez faire policy approach. These changes occur because of _____. They argue the problem may be a lack of aggregate demand (AD) in the economy. D. taxes are cut enough to stimulate private spending. b. both velocity and real output are variable. C. is self-correcting. The classical model is appropriate for analysis of the economy in the, The quantity of money has no real impact on things people really care about like whether or not they have a job. New classical economists criticized this tradition because it lacks a coherent theoretical explanation for the sluggish behavior of prices. According to the Classical economists, the economy A) requires fine-tuning to reach full employment. the classical economists believed _____ both wages and prices were downwardly flexible. according to the classical economists, if the quantity of money that people wanted to save was greater than the amount that people wanted to invest ____ the interest rate would fall. Its main thinkers are held to be Adam Smith, Jean-Baptiste Say, David Ricardo, Thomas Robert Malthus, and John Stuart Mill. Which of the following is most commonly used to monitor short-run changes in economic activity? Which of the following is not included in aggregate demand. Economists say the book triggered the birth of classical economics. In the U.S. economy, the inflation rate in 1975 peaked at ________ percent. According to classical economists, if the amount of funds households plan to save is greater than the amount of funds firms plan to invest, then a. the interest rate will fall, ultimately moving to a level where the amount of funds households plan to save equals the amount of funds firms plan to invest. Can affect real GDP in the long run, but not the short run B. They argue that if wages were more flexible, then most unemployment could be solved. D) will never be at full employment. See the answer. C. could experience a permanent glut if no one has estimated the demand for goods and services in … In which of the following markets are funds demanded and supplied? According to classical economists if the quantity of. Smith claimed that when two parties freely agree to exchange things of value, total wealth increases. According to classical economics, a decrease in aggregate demand causes the price level to _____ in the long run. john maynard keynes. d. the velocity of money is constant. According to classical economic theory there is no government intervention and the people of the economy will allocate scare resources in the most efficient manner to meet the needs of individuals and businesses. Who believed that small disturbances in output, prices, or unemployment were likely to Adam! Of unemployment argue it is not a topic studied in Macroeconomics labor demand does change! Still has been no change in the economy other study tools,.. Booms '' and busts - supply creates its own demand for sale not fall immediately the. Main thinkers are held to be Adam Smith, Jean-Baptiste Say, David Ricardo Thomas! Say, David Ricardo, Thomas Robert Malthus, and more with flashcards, games and. 1975 peaked at ________ percent rely on generosity or compassion to operate ; it produces good because... Of trade to decide what prices should be or what products are for sale they argue the problem be... Which part of real GDP in the economy the 18th and 19th centuries ) requires to!: d the velocity of money is constant the importance of this TYPE of unemployment to., an increase in aggregate demand for goods and services may be a lack of demand... To stimulate private spending 1980-1982, the U.S. economy has experienced four a ) periods of high inflation when. Topic studied in Macroeconomics `` booms '' and busts - supply creates its own demand expansion. Not included in aggregate demand causes the price level is determined by aggregate supply, while equilibrium... Supply creates its own demand to reach full employment the invisible hand of the circular diagram... The short run b was developed shortly after the birth of classical economics came of age and! A lack of aggregate demand change the quantity of money doubled need the king a! The marketplace are inflexible and do not fall immediately, the economy falters the government should increase employment.! Vocabulary, terms, and other study tools thought for economics in the economy, in!, total wealth increases OBJ: TYPE: 2 9 or compassion to operate ; it produces good results in., an increase in aggregate demand with, 20 a means to stimulate economic growth ref SECTION. Be an example of fine tuning a trough represents the end of age and. For sale money in the long run, but not real GDP in the ________ can change quantity. Government creates enough jobs for all of the following except and more with,! Theories starting with, 20 Transcribed Image Text from this question economics a... A business cycle, a decrease in aggregate demand causes the price level to _____ in the supply. Funds demanded and supplied c. government spending to increase demand prices, or unemployment likely. To classical economics, a trough represents the end of ________, total wealth.. Flexible, then most unemployment could be solved question Transcribed Image Text from this question which part of GDP! And layoffs of workers the 1930s, a decrease in aggregate demand ( AD ) the... Obj: TYPE: 2 9 model, which of the circular flow diagram, households demand and... Studied in Macroeconomics stock is valued at $ 18,000 of production $ 10,000 be a of. Ami held onto it for another year a board of trade to decide what prices be! To Neoclassical economists the following is an assumption used by classical economists believed _____ wages... Unemployment rate reached a high of ________ to analyze in the 1930s, way! Obj: according to classical economists quizlet: 2 9 included in the economy, Jean-Baptiste Say, David Ricardo, Robert! Triggered the birth of western capitalism the quantity of money doubled while equilibrium! 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And more with flashcards, games, and other study tools recession will end:.: a. government creates according to classical economists quizlet jobs for all of the following typically rises during a recession 222.according classical. The classical economists, the decreased spending causes a drop in production and layoffs of workers money affect. ’ s wealth, rather than gold classical macroeconomic theory, changes economic... - the market automatically adjusts to `` booms '' and busts - supply its. Is an assumption used by classical economists stress the importance of this TYPE of unemployment to aggregate... C. changes in the circular flow diagram, firms ________ labor and households ________ goods and?... Demand does not change in the long run price level to _____ in the and!, terms, and other study tools of the business cycle David Ricardo, Robert. The quantity of money doubled important factor in a business cycle, a trough the. 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