Date: 1. Which of the following did classical economists believe would happen if the economy experienced a downturn? A) Prices would rise. B) Interest rates would rise. C) The economy would self-correct. D) The government would fix the inefficiencies. 2. If there is no government and no foreign sector in the economy A) personal income and disposable personal income are unequal. B) international trade is an important component of total spending. C) gross domestic product equals consumption plus investment. D) budget and trade deficits are important parts of the model of the economy 3. Suppose economists observe that an increase in government purchases of $10 billicn raises aggregate expenditures by $30 billion. These economists would estimate that the marginal propensity to save is: A) 0.67. B) 0.33. C) 0.5. D) 20 9