Econ Questions?

Question

The notion that the wealth of a nation is more likely to increase if individuals are allowed to pursue their own self-interest in a market economy was first put forth by:

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a

John Maynard Keynes in The General Theory of Employment, Interest and Money.

b

Adam Smith in An Inquiry Into the Nature and Causes of the Wealth of Nations.

c

Karl Marx in Das Kapital.

d

Jean-Baptiste Say in his Treatise on Political Economy.

The classical model assumes that:

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a

aggregate demand determines the equilibrium level of output and income.

b

flexible wages ensure that labor shortages and surpluses (unemployment) will be temporary.

c

product prices will rise to eliminate shortages but are not likely to fall to eliminate surpluses.

d

household saving is a function of personal disposable income.

According to the Classical model:

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a

self-correcting markets are not possible.

b

active government intervention is recommended for controlling ups and downs in economic activity.

c

flexible prices, wages, and interest rates will eliminate shortages and surpluses in all markets.

d

if aggregate demand increases then the price level will fall without increasing real GDP.

The statement "supply creates its own demand" is commonly referred to as:

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a

the Law of Supply.

b

the Law of Scarcity.

c

Classical Law .

d

Say's Law.

When the wage rate is below the equilibrium wage rate, the classical model argues that:

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a

downward pressure on wages will eliminate the shortage in the labor market.

b

downward pressure on wages will eliminate the surplus in the labor market.

c

upward pressure on wages will eliminate the shortage in the labor market.

d

upward pressure on wages will eliminate the surplus in the labor market.

Economists who advocate a macroeconomic policy of laissez-faire:

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a

believe the economy is self-regulating so long as government intervenes to move the economy to equilibrium at natural real GDP.

b

believe the economy is self-regulating and will move to equilibrium at natural real GDP in the long run.

c

also advocate central planning and government control of resources.

d

also advocate active government intervention in the macroeconomy.

Answer 1

The wealth of nation's was wry in 175 by a Scottish philosopher.

The classical model assumes, Says law, flexible prices of goods and wages. According to the model flexible prices correct shortages and surpluses.