Economists may disagree about the validity of alternative positive theories about how the world works

Suppose the representative firm suddenly has less capital at its disposal. What happens to labor demand?

A) It increases. B) It stays the same. C) It decreases. D) We cannot tell.

The classically-based models (classical, new classical, monetarist, real business cycle) all agree that

a. markets always clear. b. monetary policy can affect output in the short-run but not the long-run. c. changes in aggregate drive most changes in output. d. stabilization policy is ineffective. e. None of the above