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According to Classical Theory, If the Aggregate Demand Curve Decreased

Question 72

Multiple Choice

According to classical theory, if the aggregate demand curve decreased and the economy experienced unemployment, then:


A) the economy would remain in this condition indefinitely.
B) the government must increase spending to restore full employment.
C) prices and wages would fall quickly to restore full employment.
D) the supply of money would increase until the economy returned to full employment.

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