Which of the following is true in the classical model?
a. A spontaneous increase in spending can cause an increase in output and employment.
b. An increase in output and employment can cause a decrease in spending.
c. A spontaneous decrease in spending can cause an increase in output and employment.
d. An increase in output and employment can cause an increase in spending.
e. A spontaneous decrease in spending can cause a decrease in output and an increase in employment.
D
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If there are short-run profits in a competitive industry, will firms enter or exit over the long run? At what point will the final equilibrium be achieved?
What will be an ideal response?
In a perfectly competitive market, an increase in output could be caused by
a. decrease in consumer demand b. an unavoidable increase in fixed costs c. higher input prices d. an increase in consumer demand