Exam 11: Classical and Keynesian Economics

A) increase the price level.
B) decrease the price level.
C) cause stagflation.
D) produce long-run economic growth.

Correct Answer

verified

Show Answer

Correct Answer

verified

Show Answer

A) As production increases,people want to buy less.
B) As production increases,wages are bid up.
C) As production increases,interest rates rise.
D) As prices rise,producers expand output.

Correct Answer

verified

Show Answer

A) output can be increased without an increase in the price level.
B) the economy is operating at the full employment level of real GDP.
C) the output and price level rise together.
D) aggregate demand is shifting to the left.
E) aggregate demand is absent.

Correct Answer

verified

Show Answer

A) A curve showing the various quantities of total real output that business will purchase for investment at various alternative price levels.
B) A curve showing the various quantities of total real output that will be offered for sale at various alternative price levels.
C) A curve showing the various quantities of goods and services that households will provide at various alternative price levels.
D) A curve showing business investment at various alternative price levels.

Correct Answer

verified

Show Answer

A) decreases in government spending.
B) increases in consumer and business confidence.
C) increases in inflationary expectations.
D) decreases in the price level.
E) declines in the demand for money.

Correct Answer

verified

Show Answer

A) consumption equals disposable income.
B) aggregate purchases equal consumption.
C) aggregate quantity demanded equals aggregate quantity supplied.
D) None of the choices are correct.

Correct Answer

verified

Show Answer

Correct Answer

verified

Show Answer

A) decrease saving and investment.
B) decrease saving and increase investment.
C) increase saving and decrease investment.
D) increase saving and investment.

Correct Answer

verified

Show Answer

A) impossible.
B) inevitable.
C) a strong possibility.

Correct Answer

verified

Show Answer

Correct Answer

verified

steeper or...

View Answer

Show Answer

A) was the dominant school of economic thought after the Great Depression.
B) advocated laissez-faire.
C) was mainly concerned with aggregate demand.
D) believed that about half of the money saved would be investeD.

Correct Answer

verified

Show Answer

Correct Answer

verified

aggregate ...

View Answer

Show Answer

A) large unions and businesses resist wage and price cuts and lower wages mean decreased incomes and consumer spending.
B) employment decisions are not influenced by wage rates.
C) investment decisions are made independently of wages and prices.
D) wage and price fluctuations have no bearing on levels of income and employment.
E) the National Labor Relations Act prohibits wage cuts.

Correct Answer

verified

Show Answer

Correct Answer

verified

Show Answer

Correct Answer

verified

borrowed b...

View Answer

Show Answer

A) Keynes asked the question: If supply creates its own demand,why are we in a worldwide depression?
B) According to Keynes,if savings were greater than investment,interest rates would fall,bringing the economy back to full employment.
C) Keynes believed that wages and prices were flexible.
D) Keynes believed the economy was basically stable.

Correct Answer

verified

Show Answer

A) As the American average price level rises,American goods become relatively more expensive so that our exports fall and our imports rise.
B) As the average price level falls,the interest rate declines,and interest-rate sensitive spending increases.
C) When the average price level increases,real balances increase,businesses and households find themselves wealthier and therefore increase their spending.
D) An increase in aggregate supply tends to increase real domestic output and reduce the average price level.

Correct Answer

verified

Show Answer