1) Together the IS and LM equilibrium is used to construct which of the following? the...

1) Together the IS and LM equilibrium is used to construct which of the following?

the aggregate demand curve

the aggregate supply curve

the long run aggregate supply curve

the short run aggregate supply curve

2)For the Classicals, the remedy for the Great Depression would be?

		aggressive fiscal policy
		aggressive monetary policy
		aggressive fiscal and monetary policy
		wait for the long run

Solutions

Expert Solution

1.Option A

The equilibrium level of national income in the IS–LM diagram is referred to as aggregate demand.The IS-LM model describes how aggregate markets for real goods and financial markets interact to balance the rate of interest and total output in the macroeconomy.

2.Option D

Classical economists believe that the economy is self-correcting, which means that when a recession occurs, it needs no help from anyone. Classical Economists emphasized on the long run. In the long run all would be set right by the smooth functioning of the price system.They said that the natural level of employment and potential output can be achieved in the long run.

Rahul Sunny answered 1 year ago

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