In the classical model
A) a decrease in aggregate demand will lead to a decrease in the price level and a decrease in real GDP.
B) changes in aggregate supply leave real GDP unchanged.
C) a decrease in aggregate demand will lead to an increase in the price level and a decrease in real GDP.
D) changes in aggregate demand affect only the price level, not real GDP.
D
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The idea that paying higher wages attracts a more talented labor pool is called the
a. winner's curse b. efficiency wage theory c. marginal productivity theory d. lemons problem e. theory of the second best
Using the expenditure method to estimate GDP, we would include:
A. consumption, investment, government purchases, and net exports. B. consumption, government revenues, durable goods, and net exports. C. consumption, investment, government purchases, and exports. D. consumption, investment, government purchases, and imports.