Econ CH 11 Study Plan – Flashcards
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Consider a country whose economic structure matches the assumptions of the classical model.
After reading a recent​ best-seller documenting a growing population of high−income elderly people who were over−prepared for​ retirement, most residents of this country decide to decrease their saving at any given interest rate.
From the list given below choose the letter that gives the resulting outcome for each of the following​ variables:
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I - Increase
D - Decrease
N - No effect
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The current equilibrium interest rate
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I - Increase
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Current equilibrium real GDP
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N - no effect
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Current equilibrium employment.
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N - no effect
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Current equilibrium investment.
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D - decrease
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Future equilibrium real GDP.
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D - decrease
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The model of​ long-run equilibrium
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is the same as the Classical Model.
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One of the main conclusions of​ Say's Law was that
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if people supply goods in order to then demand​ goods, there can be no overproduction in a market economy and full employment will be the normal state of affairs.
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Which of the following best exemplifies​ Say's Law?
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The production of a​ $4000 plasma TV set creates demand for other goods and services valued at​ $4000.
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Say's Law fits best in the ____ since this philosophy placed great importance on ____ to determine the ____.
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Classical theory / aggregate supply / level of output
