Asked by Anastasiia Semenenko on Jul 02, 2024
Verified
Classical economists perceive that
A) investors' expectations about returns on investment are unstable.
B) large investment swings are responses to small changes in interest rates.
C) the best way to cure unemployment is to start a war.
D) the proper cure for unemployment is active fiscal policy.
Classical Economists
Economists from the late 18th and early 19th centuries who focused on the role of free markets in promoting economic growth and wealth distribution.
Fiscal Policy
Fiscal policy involves the use of government spending and tax policies to influence economic conditions, including aggregate demand, employment, and inflation.
Investment Swings
Refers to the fluctuations in investment spending on business capital goods, which can be influenced by interest rates, business confidence, and economic conditions.
- Recognize the perspectives and presuppositions of economists from the new classical, monetarist, Keynesian, and supply-side schools.
Verified Answer
ML
Micha LeSane7 days ago
Final Answer :
B
Explanation :
Classical economists believe that investment decisions are highly responsive to changes in interest rates, meaning that even small changes in interest rates can lead to significant swings in investment levels. This view contrasts with other economic theories that might emphasize different factors influencing investment.
Learning Objectives
- Recognize the perspectives and presuppositions of economists from the new classical, monetarist, Keynesian, and supply-side schools.