Asked by Laura Cinnamon on May 19, 2024
Verified
Which of the following statements is false?
A) The economy is in equilibrium when saving equals investment.
B) The classical school believed we are always tending toward full employment.
C) The classical economists' aggregate supply curve is vertical in the short run.
D) The economy is in equilibrium when aggregate demand equals aggregate supply.
Saving Equals Investment
A macroeconomic identity where all saved money within the economy is assumed to equal all invested money, indicating a balance in the financial system.
Aggregate Demand
The total demand for all goods and services in an economy at a given time and price level.
- Understand the principle of aggregate demand and aggregate supply curves, along with their significance for economic conditions.
- Assess the impact of variations in total supply or demand on equilibrium within the economy.
Verified Answer
TS
taravat sharafatMay 24, 2024
Final Answer :
C
Explanation :
The classical economists' aggregate supply curve is actually vertical in the long run, not the short run. In the short run, it can be upward sloping due to sticky prices and wages.
Learning Objectives
- Understand the principle of aggregate demand and aggregate supply curves, along with their significance for economic conditions.
- Assess the impact of variations in total supply or demand on equilibrium within the economy.