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-According to Classical Economics, If Aggregate Demand Were at AD2

Question 20

Multiple Choice

  -According to classical economics, if aggregate demand were at AD<sub>2</sub> and prices and wages were at P<sub>1</sub>W<sub>1</sub>: A)  prices and wages would eventually fall back to P<sub>2</sub>W<sub>2</sub>. B)  the aggregate demand curve AD<sub>2</sub> would shift to the left. C)  the full employment level of output would shift to the left. D)  prices and wages would remain at P<sub>1</sub>W<sub>1</sub> and the full employment level of output would remain where it was before the change in prices and wages.
-According to classical economics, if aggregate demand were at AD2 and prices and wages were at P1W1:


A) prices and wages would eventually fall back to P2W2.
B) the aggregate demand curve AD2 would shift to the left.
C) the full employment level of output would shift to the left.
D) prices and wages would remain at P1W1 and the full employment level of output would remain where it was before the change in prices and wages.

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