In the classical model, potential output cannot be increased by ?

Related Mcqs:

1. Expansionary fiscal policy in the classical model will cause aggregate demand to _______ potential output?

   A. exceeds
   B. fall below
   C. fluctuate around
   D. remain equal to

2. The Keynesian model is a good guide to ____ behavior and the classical model describes behavior in ______?

   A. long run, short run
   B. flexible imperfect markets
   C. short-term long run
   D. long run, imperfect markets

3. The Heckscher-Ohl in model rules out the classical model’s basis for trade by assuming that _________ is (are) identical between countries?

   A. factor endowments
   B. factor intensities
   C. technology
   D. opportunity costs

4. Potential output can be increased by ____ or by ______?

   A. increasing the use of labor increasing the use of land
   B. increasing the use of capital increasing the use of labour
   C. increasing the use of land increasing the use of capital
   D. increasing the use of all inputs, technical advances

5. The classical model of macroeconomics assumes ?

   A. wages and prices are sticky
   B. wages and prices are flexible
   C. the economy may operate below full capacity
   D. the economy is always at full capacity
   E. A and C
   F. B and D

6. An advocate of the classical model of the economy would claim that unemployment is created when the ____ is above its equilibrium level in the ______?

   A. price level, aggregate economy
   B. tax rate, government budget
   C. wage rate, labor market
   D. interest rate, market for loanable funds

7. If input price prices adjusted very rapidly to output prices as classical economists argue the Philips curve would be ?

   A. Vertical or nearly vertical
   B. upward sloping
   C. downward sloping
   D. horizontal or nearly horizontal

8. In the classical model of Ricardo, the direction of trade is determined by ?

   A. Absolute advantage
   B. Comparative advantage
   C. Physical advantage
   D. Which way the wind blows

9. Potential GDP is the level of aggregate output ?

   A. that can be produced if structural unemployment is zero
   B. that can be produced at a zero-unemployment rate
   C. that can be sustained in the long run without inflation
   D. that can be sustained in the long run, if the inflation rate is zero

10. The hypothesis that people know the true model of the economy and that they use this model to form their expectations of the future is the ?

    A. Rational-expectations hypothesis
    B. Passive-expectations hypothesis
    C. adaptive expectations hypothesis
    D. lagged-expectations hypothesis.