Classical economists assumed that
A) wages were inflexible. B) individuals suffered from money illusion.
C) prices were sticky. D) none of the above.
D
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According to classical theory, if the aggregate demand curve decreased and the economy experienced unemployment, then:
a. the economy would remain in this condition indefinitely. b. the government must increase spending to restore full employment. c. prices and wages would fall quickly to restore full employment. d. the supply of money would increase until the economy returned to full employment.
If both matches and automobile prices increase by 10 percent, consumers will likely buy
a. fewer matches and approximately the same quantity of automobiles. b. approximately the same quantity of matches and fewer automobiles. c. fewer matches and fewer automobiles. d. approximately the same quantity of both matches and automobiles.