Why is it unlikely that expansions could be explained by a decrease in labor demand in the classical model?
a. It would be hard to say why productivity decreases.
b. Productivity increases are too fast and variable to explain expansions.
c. Productivity tends to improve at a constant and steady rate.
d. Only unexplained spending changes can lead to changes in output and employment, not the other way around.
e. Productivity improvements are rather slow.
E
Economics
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Currency outside of banks increases from $100 million to $200 million. This change is considered
A) a currency drain. B) a decrease in the monetary base. C) expansionary monetary policy. D) contractionary monetary policy.
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According to the equation of exchange, the money supply times the velocity of money equals the
A) price level. B) growth rate of the money supply. C) real GDP. D) nominal GDP.
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