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butalik [34]
2 years ago
6

Describe Classical Theory. To do so, begin by describing its approach to the circular flow model and indicate its assumption abo

ut employment and output in the economy. Close with a description of the aggregate demand curve, aggregate supply curve used to find equilibrium in this model.
Business
1 answer:
gogolik [260]2 years ago
8 0

Answer and Explanation:

Classical Theory:

Classical theory states that the economy is free flowing and that there should be no outside intervention. It states that the prices and wages move up and down freely. During good times the prices and wages tend to increase and during bad times or recession the prices and wages are adjusted accordingly to downwards.

Another vital information pertaining to classical theory is that it states: economy is always at full employment level of output. Which means that the aggregate supply curve is vertical and this implies that the increase in aggregate demand or a decrease in aggregate demand will lead to increase or decrease respectively. However, the output will remain same in the economy when it comes to the classical approach.

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A. All of these 3 other possible answers that are listed here are true reasons.

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If we are to use wage the rate of change in wages or inflation, as a proxy for inflation in the economy, when there is unemployment, the number of persons searching for work is significantly greater than the number of jobs available for the people who are unemployed. What we mean is, the supply of labor is greater than the demand for it.

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Network externality is the correct answer.

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3 years ago
Atlantic Coffee has recently decided to raise its prices by10%.It was shocked by itscustomers' reactionto the price increase whe
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Atlantic Coffee has recently decided to raise its prices by10%. It was shocked by its customers' reaction to the price increase when sales dropped24%. such a sharp drop in sales occurs because:_the demand for a specific brand of coffee is highly elastic.

The market fee is the modern rate at which an excellent service can be purchased or sold. The market price charge of an asset or carrier is decided with the aid of the forces of delivering and calling for; the fee at which the amount provided equals the amount demanded is the marketplace rate.

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1 year ago
A ________ exists when paid staff conduct most of the daily business of a group.
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3 years ago
Brummer Corporation makes a product whose variable overhead standards are based on direct labor-hours. The quantity standard is
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$91 favorable

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3 years ago
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