Quiz 6

Question 1

Classical economists believe people make employment decisions based on their ______ wage.

Answer 1

real

Question 2

The Classical word for equilibrium is:

Answer 2

natural

Question 3

Say’s Law says that income is created by sales, regardless of the time difference between production and sale of a good.

Answer 3

False

Question 4

The classical word for recession is:

Answer 4

glut

Question 5

For Classical economics to work, wages must be completely flexible, both up and down.

Answer 5

True

Question 6

In Classical economics, savings always equal investment.

Answer 6

True

Question 7

In the Classical world, interest rates are determined by:

Answer 7

savings and investment

Question 8

In the Classical world, inflation is caused by:

Answer 8

too much money in the economy

Question 9

Classical economics was the dominant theory in economics from Adam Smith until:

Answer 9

the Great Depression

Question 10

Classical economists argue the Great Depression happened because prices and wages stayed high and did not fall much after the depression started.

Answer 10

False