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Why Is It Unlikely That Expansions Could Be Explained by a Decrease

Question 27

Multiple Choice

Why is it unlikely that expansions could be explained by a decrease in labor demand in the classical model?


A) It would be hard to say why productivity decreases.
B) Productivity increases are too fast and variable to explain expansions.
C) Productivity tends to improve at a constant and steady rate.
D) Only unexplained spending changes can lead to changes in output and employment,not the other way around.
E) Productivity improvements are rather slow.

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