purchase of bonds and company stocks increase in the stock of inventories. Q. 17. Economic thinkers before Keynes were in firm belief that, if only price is (and nominal variables are) flexible, it will not affect--- and in the long run there are no---- a) Real variables, disequilibria b) Nominal variables, problems c) Inflation in nominal terms, disequilibria d) Nominal GDP, guarantees of anything. Q.18 One of the most challenging events that classical economists had a hard time in explaining was a) Current recession b) Great Depression c) the big recession of 1982 d) inflation of 1970s. Q.19 According to classical economists, all disequilibria were supposed to be ---- , and the fluctuations in ---- - make sure that all markets should stay in------ permanent, prices, equilibrium temporary, prices, equilibrium. permanent, markets, surplus temporary, markets, shortage. Q.20 In the consumption function which one of the following is NOT the meaning of the constant term at the start of the equation? It is the------ a) part of the consumption that is independent of GDP intercept of vertical axis slope of the consumption function. d) Autonomous consumption Q.21 An increase in price level and simultaneous increase in all other money values, in classical economists terms, would do a) nothing, since people have no money illusion nothing, since people do have money illusion something as there will be increase in real values d) substantial damage since the price level is increasing Q.22 Using usual notations, in a closed economy setting, where government sector is active, the total expenditure is measured as: a) C+I+G+M-X