If the price level in the current period is higher than buyers and sellers anticipated, what will tend to happen to real wages and the level of employment? How will the profit margins of businesses be affected? How will the actual rate of unemployment compare with the natural rate of unemployment? Will the current rate of output be sustainable in the future? Why or why not?
If the price level in the current period is higher than buyers and sellers anticipated, what will tend to happen to real wages and the level of employment? How will the profit margins of businesses be affected? How will the actual rate of unemployment compare with the natural rate of unemployment? Will the current rate of output be sustainable in the future? Why or why not?
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6) According to Classical theory, the economy is self-regulating. If it is in a recessionary gap, what happens? Question options:
Wages rise, the SRAS curve shifts leftward, and both Real GDP and the price level rise.
Wages fall, the SRAS curve shifts rightward, the price level falls, and Real GDP rises.
Wages fall, the SRAS curve shifts leftward, the price level rises, and Real GDP falls.
none of the above
7) According to the classical economists, which of the following statements is true?
Question options:
| Financial markets ensure that S will equal I.. | |||||||||||
| Interest rate flexibility will ensure that planned saving is equal to planned investment. | |||||||||||
| There is a direct relationship between the amount individuals plan to save and the interest rate - higher rates cause people to save more and lower rates reduce savings. | |||||||||||
| Interest rates determine how much business firms invest - higher interest rates reduce investment and lower rates increase investment. | |||||||||||
| All of the above are true. 10) If actual Real GDP is greater than the full employment Real GDP, then the (actual) unemployment rate is Question options:
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