Exam 11: Fiscal Policy: the Keynesian View and Historical Perspective

Figure 11-4 -According to Keynesian analysis,which of the following policy combinations would most likely to move the economy illustrated in Figure 11-4 to full employment?

According to the Keynesian view,if purchasers buy more goods and services than businesses expect,

Suppose long-run equilibrium is present and the government budget is in balance.Which of the following would be most likely to occur if the economy falls into a recession?

Keynesian analysis stresses that a tax increase that shifts the federal budget toward a surplus

According to the Keynesian view,if real GDP is slowing and the economy appears to be headed for a recession,a reduction in tax rates is

Rather than seeking to balance the budget,Keynesian economists argue that the government's tax and spending policies should be determined by the

Tax rates that produce revenues equal to government expenditures when an economy operates at its long-run capacity will lead to a

The distinction between discretionary fiscal policy and the use of automatic stabilizers is that

Within the Keynesian model,when total spending is less than the full-employment level of output,firms will

Which of the following is the best example of an automatic stabilizer?

When there are few unemployed resources,additional spending will tend to

Prior to the time of John Maynard Keynes,most economists stressed that

If a fiscal policy change is going to exert a stabilizing impact on the economy,it must

According to Keynesian theory,which of the following would most likely stimulate an expansion in real output if the economy were in a recession?

During normal times,the multiplier effect of an increase in government spending financed by taxes will be

"If there is unemployment,the average wage rate will decline as the unemployed workers choose lower wages rather than going without a job.The demand curve for labor slopes downward and to the right so that more workers would be hired at the lower wage rate,restoring full employment." According to the Keynesian view,this quote is

The main reason that the deficit grows in a recession is that

The Keynesian model provided an explanation for

In the Keynesian view,equilibrium takes place when

When an economy dips into recession,automatic stabilizers will tend to