Households are buyers in factor markets and sellers in goods markets

According to Baumol and Blinder, the lag between the time a policy is implemented and the time it affects aggregate demand is

a. longer for fiscal than monetary policy. b. longer for monetary than fiscal policy. c. approximately equal for both. d. influenced mainly by the size of the multiplier.

Which of the following supports the classical theory of employment?

A. The interest rate will not always equalize savings and investment. B. Not everything produced will necessarily be purchased. C. Saving and investing are done by different people for different reasons. D. Wages and prices are flexible downwards.