Answer:
The answer is fall ; not change.
Explanation:
The fundamental principle of the classical theory is that the economy is self‐regulating. Classical economists maintain that the economy is always capable of achieving the natural level of real GDP or output, which is the level of real GDP that is obtained when the economy's resources are fully employed.
At any one time, the economy is assumed to have a unique equilibrium at full employment or potential output achieved through price and wage adjustment. In other words, the market clears at all times.
Answer:
The correct words, that fills the gaps are: fall ; not change.
Explanation:
A decrease in aggregate demand can generate an increase in unemployment (although it also usually leads to a decrease in inflation).
The application of an expansive fiscal policy aims to increase employment (although there is also the possibility of increasing inflation and generating a public deficit).
An increase in aggregate demand leads to inflation growth (but it can also generate a decrease in unemployment).
The application of a restrictive fiscal policy aims to reduce inflation (although there is also the possibility that unemployment will increase and a public surplus will be generated).
