Prior to the 1970s, the model of choice was the aggregate expenditures model. According to
This model, if the economy was in equilibrium below full employment, then the primary economic problem would be
A) unemployment.
B) deflation.
C) financing the government budget deficit.
D) financing unemployment compensation.

Question

Quizplus · Accepted Answer

According to the aggregate expenditures model, if the economy is in equilibrium below full employment, then there is not enough aggregate demand to drive full employment, resulting in unemployment as the primary economic problem. Options B, C, and D are not directly related to the aggregate expenditures model's concept of equilibrium and full employment.

Prior to the 1970s, the Model of Choice Was the Aggregate