In the aggregate expenditures model, an increase in government spending may:
A. decrease real GDP.
B. increase output and employment.
C. shift the aggregate expenditures schedule downward.
D. reduce the size of the inflationary gap.
B. increase output and employment.
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Which of the following factors will not determine output and employment in the classical model?
a. Taxes that affect the incentive to work or hire labor b. The level of government spending c. The quantity of capital d. Preferences for leisure e. None of the above
Adam Smith believed that the goal of economic activity is to amass wealth in the form of gold, and that this could best be accomplished through government carefully using tariffs and quotas to fashion favorable terms of trade with its trading partners
a. True b. False Indicate whether the statement is true or false