Exam 20: The Classical Long-Run Model

The supply of loanable funds curve is upward-sloping because a rise in the interest rate

According to Say's Law,

-Refer to Figure 8-2.The economy is at full employment if

Fiscal policy is

In an economy without international trade,we can expect total output to equal

Market clearing in the loanable funds market

Assume that markets clear.If in the labor market there is

Say's law promises that each and every firm in the economy will be able to sell all of the particular output it produces.

In the long run,if an economy's consumption spending is $5 trillion,its planned investment is $2 trillion,government spending is $1 trillion,net tax revenue is $1 trillion,and household savings are $2 trillion,total output should be

In the classical model,we assume there is no ongoing inflation,so there is no need to distinguish between the nominal interest rate and the real interest rate.

In the classical model,we include unintended inventory changes.

If political influences,independent of any economic forces,lead to a larger government budget deficit,what will be the effect on the loanable funds market?

In the classical model,the government needs to worry about employment.

An aggregate production function,when shown on a graph,

Which of the following is not an accurate description of the point at which the labor supply and labor demand curves meet?

Which of the following statements is true when total spending equals total output?

Net taxes are

When we talk about injections in the classical model,we refer to

According to the classical model,if the government lowers its budget deficit,which of the following will occur?

-Refer to Figure 8-3.This figure is known as