Exam 23: The Keynesian Framework

In Keynes' concept of the liquidity trap,

If the MPC is b, then the multiplier is

In the Keynesian model, which of the following will cause an increase in interest rates?

In the Keynesian model when desired investment exceeds desired saving,

Consumption spending is __________ and investment spending is __________ in the Keynesian model.

According to supply-siders the main consequence of reducing tax rates is

An individual anticipating rising interest rates is likely to hold more

In the Keynesian model, portfolio decisions of individuals determine the

If the consumption function can be described as C = 200 + .80Y, the marginal propensity to save is equal to

In the standard consumption function of C = a + bY, the MPC is

In the "cost of capital channel" of monetary policy, a higher interest rate __________ spending.

In the Keynesian model, which of the following will cause a reduction in interest rates?

Keynes argued that if the economy is in a severely depressed state then __________ is constant.

If the aggregate supply curve is horizontal, an increase in aggregate demand will

Keynesian theory emphasizes

As part of the "wealth channel of monetary policy," a higher money supply __________ bond prices and thus __________ spending.

In the simple Keynesian model which has no taxes and a saving function which is in the form S = -80 + .20Y, a $200 increase in desired investment leads to an increase in equilibrium income of

Assume a consumption function of the following form: C = 100 + .8Y. If income is equal to $3,000, then consumption is

In the aggregate demand and supply framework, an increase in the money supply will shift the aggregate

As a result of a decline in the expected rate of return on investment, GDP would not have to fall if the government __________ taxes or __________ government spending.