Question 1

Which of the following statements is FALSE?

Accepted Answer

A)  Until the 1970s the American economy was essentially a closed system.
B)  Until the 1970s Say's Law best described our economic system.
C)  The American economy is more dependent on foreign manufacturing today than it was in the 1970s,and is therefore more of a closed economy.
D)  The American economy today is an open economy where supply no longer creates its own demanD.

Question 2

The Keynesian and classical aggregate supply analyses

Accepted Answer

A)  are completely different.
B)  have some similarities.
C)  are very similar.

Question 3

Keynes believed

Accepted Answer

A)  increases in investment expenditures are due to lower interest rates.
B)  increases in investment expenditures are due to high profit expectations.
C)  increases in investment expenditures are due to excessive funds in the loanable funds market.
D)  since supply creates its own demand,increases in investment expenditures creates additional supply and therefore more demand and earnings for the businesses.

Question 4

If aggregate demand increases and,as a result,the price level increases but equilibrium real GDP and employment remain unchanged,we can assume that the aggregate demand curve

Accepted Answer

A)  intersects the upward-sloping segment of the aggregate supply curve.
B)  intersects the vertical segment of the aggregate supply curve.
C)  intersects the horizontal segment of the aggregate supply curve.
D)  is horizontal.

Question 5

Keynesian theory

Accepted Answer

A)  Established the validity of Say's Law.
B)  Assumes that supply creates its own demand.
C)  Is primarily demand-oriented.
D)  Assigns much importance to aggregate supply and the average price level.

Question 6

It is _____ that in the classical model,prices and wages are fixed;it is _____ that according to the classical economists,full employment is the norm.

Accepted Answer

A)  true;true
B)  false;false
C)  false;true
D)  true;false

Question 7

Aggregate demand is ____________.

Accepted Answer

the amount of money that indiv...

Question 8

According to the classicals,our economy can produce beyond the full employment output

Accepted Answer

A)  only in the short run.
B)  only in the long run.
C)  in both the short run and the long run.
D)  in neither the short run nor the long run.

Question 9

If aggregate production in the economy exceeds aggregate purchases

Accepted Answer

A)  unintended inventory investment is positive.
B)  inventories will be drawn down.
C)  there is upward pressure on real GDP.
D)  aggregate purchases will tend to increase until equilibrium is achieveD.
E)  firms are selling more during the year than they are producing.

Question 10

If the real national output is less than the equilibrium real national output producers find

Accepted Answer

A)  their inventories decreasing and expand their production.
B)  their inventories increasing and expand their production.
C)  their inventories decreasing and contract their production.
D)  their inventories increasing and contract their production.

Question 11

According to Keynes,at equilibrium,aggregate demand will always equal which of the following?

Accepted Answer

A)  Aggregate supply
B)  C + S
C)  C + I
D)  All of the choices are correct.

Question 12

The Keynesian analysis of macroeconomic equilibrium shows

Accepted Answer

A)  how declines in aggregate supply can cause prosperity.
B)  how declines in aggregate demand can cause economic expansion.
C)  how declines in aggregate purchases can result in a recession and cyclical unemployment.
D)  All of the choices are correct.

Question 13

Keynes believed in all of the following EXCEPT,

Accepted Answer

A)  the expected rate of profit was more important than the interest rate.
B)  recessions are temporary.
C)  expansionary government spending and tax cuts are cures for recessions and depressions.
D)  in the short run,aggregate demand should be manipulated to stabilize the economy.

Question 14

Keynesian macroeconomic theory may be summarized by the idea that demand creates ____.

Accepted Answer

The answer of Keynesian macroeconomic theory may be summarized by...

Question 15

When the economy is operating at full capacity we are in the _____ range of the aggregate supply curve.

Accepted Answer

The answer of When the economy is operating at full...

Question 16

Our economy is always tending towards full employment according to

Accepted Answer

A)  John Maynard Keynes.
B)  the classical economists.
C)  both Keynes and the classicals.
D)  neither Keynes nor the classicals.

Question 17

The vertical part of the aggregate supply curve is the _____ range.

Accepted Answer

The answer of The vertical part of the aggregate supply...

Question 18

The classical economists

Accepted Answer

A)  dominated economic thought until the Great Depression.
B)  believed that supply creates its own demand.
C)  believed that any money saved will be invested.
D)  believed that the economy was always tending toward full employment.
E)  All of the statements are true of classical economists.

Question 19

Which of the following solutions would a Keynesian economist suggest to avoid turning the recession of the late 20s into the depression of the 30s?

Accepted Answer

A)  Balance the federal budget
B)  Decrease the available of unemployment compensation
C)  Decrease the interest rate
D)  Decrease government spending

Question 20

Full employment GDP is the level of spending ___________.

Accepted Answer

necessary to generate enough p...

Exam 11: Classical and Keynesian Economics

Our economy is always tending towards full employment according to

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The vertical part of the aggregate supply curve is the _____ range.

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It is _____ that in the classical model,prices and wages are fixed;it is _____ that according to the classical economists,full employment is the norm.

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Keynesian macroeconomic theory may be summarized by the idea that demand creates ____.

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Which of the following statements is FALSE?

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Keynes believed in all of the following EXCEPT,

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The Keynesian analysis of macroeconomic equilibrium shows

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Keynesian theory

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If aggregate demand increases and,as a result,the price level increases but equilibrium real GDP and employment remain unchanged,we can assume that the aggregate demand curve

Correct AnswerverifiedShow Answer

The Keynesian and classical aggregate supply analyses

Correct AnswerverifiedShow Answer

According to Keynes,at equilibrium,aggregate demand will always equal which of the following?

Correct AnswerverifiedShow Answer

According to the classicals,our economy can produce beyond the full employment output

Correct AnswerverifiedShow Answer

Aggregate demand is ____________.

Correct Answerverifiedthe amount of money that indiv...View AnswerShow Answer

Keynes believed

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When the economy is operating at full capacity we are in the _____ range of the aggregate supply curve.

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The classical economists

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Full employment GDP is the level of spending ___________.

Correct Answerverifiednecessary to generate enough p...View AnswerShow Answer

If the real national output is less than the equilibrium real national output producers find

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If aggregate production in the economy exceeds aggregate purchases

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Which of the following solutions would a Keynesian economist suggest to avoid turning the recession of the late 20s into the depression of the 30s?

Correct AnswerverifiedShow Answer

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It is _ that in the classical model,prices and wages are fixed;it is _ that according to the classical economists,full employment is the norm.

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the amount of money that indiv...
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necessary to generate enough p...
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