22) What would happen in an econoemy if total planned production exceeded total
ID: 1107572 • Letter: 2
Question
22) What would happen in an econoemy if total planned production exceeded total planned real 22) expenditures? A) Inventories would accumulate, and firms would tend to raise prices B) Inventories would be depleted, and firms would tend to lower prices C) Inventories would be depleted, and firms would tend to raise prices. D) Inventories would accumvulabe, and firms would tend to lower prices 23) Demand-side inflation occurs when 25)-- A) aggregate demand falls more rapidly than aggregate supply B) increases in aggregate supply outstrip increases in aggregate demand. C) long-run aggregate demand rises faster than short-run aggregate supply. D) increases in aggregate demand are not matched by increases in aggregate supply 24) The idea that supply creates its own demand is known as 24) A) the law of supply C) Keynes' law B) Say's lavw D) the law of demand. 25) In the classical model, aggregate demand and aggregate supply will 25) A) inbersect at the point of full employment C) not exist B) not intersect D) intersect at less than full employment. 26) According to classical economists, a decrease in the rate of interest will 26) A) increase business investment C) increase unemployment B) increase consumer saving. D) increase business failures. Long-run aggregate supply carve in the classical model 27) A) is determined by the capital stock of the economy, sot the labor force B) is the level of real GDP corresponding to the natural rate of unemployment C) is a downward sloping line. D) is the level of real GDP corresponding to 100 percent labor force participation. Price Level AD AD AD SRAS Real GDP per Year 28) The above figure presents the view of the economy according to 28) A) Ricardian economics C) Keynesian economics B) classical economics D) microanalysis.Explanation / Answer
22. Option D
This is because there would be a pile of unsold stocks with the firms. To deplete this inventories the firms would be willing to lower their profits and sell out most of the accumulated inventories.
23. Option D
When factors affecting the demand changes such that the demand increases drastically but increase in supply takes time, this lag results into rapid increase in prices.
24. Option B
Economist J.B.Say, classical economist gave this theory and is known after his name.
25. Option A
Classicals assumed that the economy will always operate on the full employment level.
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