In the classical model, an increase in aggregate demand will lead to an increase in wage rates while a decrease in aggregate demand will
A) change the price of capital.
B) leave wages unchanged since workers will not take a cut in pay.
C) increase wages since business will be desperate for labor.
D) decrease wages.
Question 2
According to new growth theory, as technology becomes more important to growth, so does
A) increasing taxes. B) human capital.
C) military spending. D) increasing trade barriers.
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