Classical economics refers to the perspective that the business cycle can be explained
A) using equilibrium analysis.
B) using disequilibrium analysis.
C) by long-run macroeconomic fluctuations.
D) by short-run macroeconomic instability.
A
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When there are credit market frictions, Ricardian equivalence may not hold because
A) consumers cannot understand the implications of the government budget constraint. B) a tax cut in the present with a future increase in taxes works effectively like a loan. C) an increase in government saving is matched one-for-one by a decrease in private saving. D) social security is fully-funded.
A firm that wants to maximize profits should hire each input to the point where
A) its marginal revenue product divided by the price of the input equals one. B) its marginal revenue product divided by its marginal physical product equals the wage. C) its marginal revenue product divided by the product price equals one. D) its marginal physical product divided by the price of the input equals the product price.