Understanding AP Classical View
Multiple Choice Questions
1) The clearest example of the Classical View is the Vertical Aggregate Supply Curve
Any change in AD only increases or decreases the PL
No Change in RGDP
Notice the graph above is Inflation
(E.) As wages increase, it shifts the SRAS to the left,
(E.) As wages increase, it shifts the SRAS to the left,
Business prices increase and output returns to full employment (LR-Equilibrium)
at a higher price level (No change in the RGDP)
1990 Exam
Perhaps we should have started with the types of questions tested by the College Board
on the Classical View that involve no graphs
but understandings about the characteristics of the Classical View
From the Classical View Cheat Sheet
found here.
1990 Exam
1995 Exam
2005 Exam
1990 Exam
Notice the graph above is Recession
(C.) lower resource prices, which will reduce costs and shift
SRAS to the right
Until full-employment is achieved
at a lower price level
Perhaps we should have started with the types of questions tested by the College Board
on the Classical View that involve no graphs
but understandings about the characteristics of the Classical View
From the Classical View Cheat Sheet
found here.
Understand that all of these phrases above clue us into the fact that we are taking the Classical View |
1990 Exam
(D.) Prices and Wages are flexible
(B.) The economy is self-correcting to full-employment
2000 Exam
(A.) A market economy is self-correcting and thus
will not remain in recession indefinitely
2005 Exam
(C.) Self-correcting market forces stemming from
flexible prices and wages
Or
We could talk about if the College Board starts a question in a Recession
2008 Exam
Less than Full Employment = Recession
(A.) Output increases & the PL falls
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