According to classical economists, the aggregate supply curve is
a.vertical in both the long run and the short run
b. vertical only in the long run
c. vertical only in the short run
d. horizontal in the short run
According to the classical economists, unemployment was a temporary deviation from equilibrium, and certain forces in the economy would return it to full employment. Such forces did not include
a.price competition
b. wage competition
c. a variable rate of interest
d. discretionary government spending
In the classical model, a basic theoretical feature of self-regulating markets was that
a.unsold inventory and labor unemployment would cause prices and wages to increase
b. lower wages and prices would eliminate unemployment and unsold inventory
c. unsold inventory would never occur
d. an increase in planned saving would cause an increase in the interest rate and a decrease in investment
The time lags lead monetarists to contend that monetary policy is counterproductive.
True
False
Critics of supply-side economics claim that it
a.favors the wealthy
b. increases federal debt
c. can be inflationary
d. all of the above