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

During normal times,if the marginal propensity to consumer is 3/4,and the government borrows $10 billion in order to increase spending by that amount,real output will expand by

If an economy is experiencing both full employment and price stability,within the Keynesian model,a major tax reduction probably would cause

The larger the marginal propensity to consume,

The multiplier principle indicates that if business decision makers become more optimistic about the future and,as a result,increase their investment expenditures by $50 billion,real GDP

Prior to the Great Depression,most economists believed that a recessionary downturn would be reversed by

The 1930s were a period of

Keynesian analysis stresses that a tax cut that increases the government's budget deficit (or reduces its budget surplus)

What three types of timing problems might policy makers experience when conducting discretionary fiscal policy?

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

When the federal government is running a budget surplus,

When an economy is operating below its potential capacity,Keynesian economists argue that

Figure 11-4 -What happens in the economy illustrated in Figure 11-4 if government purchases increase by the amount necessary to achieve full employment?

According to the Keynesian view,if policy makers thought the economy was about to enter an inflationary boom,which of the following would be most appropriate?

Which of the following best expresses the central idea of countercyclical fiscal policy?

If an economy were experiencing a high rate of unemployment as the result of weak aggregate demand,a Keynesian economist would be most likely to recommend

Because of automatic stabilizers,government budget deficits are

The marginal propensity to consume is defined as the

Use the figure below to answer the following question(s). Figure 11-2 -Refer to Figure 11-2.Which of the following will a Keynesian most likely favor if the economy is operating at point a?

Keynesian analysis indicates that an unexpected decline in aggregate demand will lead to

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