Which of the following assumptions of the classical model is the best reason we cannot use it to explain short-run economic fluctuations?
a. Markets never clear in the long run.
b. The labor market clears.
c. Prices remain constant and supply and demand adjust.
d. It does not show how an economy recovers from a recession.
e. Government intervention is essential to get markets to clear.
B
Economics
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If the equilibrium level of real GDP per year is greater than the full-employment level of GDP, then
A) the economy is at full employment with no price changes. B) the economy expands the level of real GDP. C) an inflationary gap occurs. D) a recessionary gap occurs.
Economics
Since World War II, the share of total income going to the bottom 20 percent of U.S. households has
A) fallen by 20 percent. B) increased by 10 percent. C) remained constant. D) more than doubled.
Economics