From the perspective of classical macroeconomic theory, if aggregate spending was temporarily less than output:
A) Product price would increase, but resource prices would decrease
B) Product price would decrease, but resource prices would increase
C) Product and resource prices would decrease, so that aggregate spending would rise, expanding output
D) Product and resource prices would increase, so that aggregate spending would equal output

Question

Quizplus · Accepted Answer

In classical macroeconomic theory, if aggregate spending is less than output, prices would decrease to stimulate demand, leading to an increase in aggregate spending and a return to equilibrium.

From the Perspective of Classical Macroeconomic Theory, If Aggregate Spending