Exam 10: Classical and Keynesian Macro Analyses

How does the original, simplified Keynesian model compare with modern Keynesian analysis?

With respect to unemployment, the classical model states that

The significant increases in oil prices during the late 2000s was an example of

Q: How many economists does it take to screw in a light bulb? A: None. If the light bulb really needed changing, market forces would have already caused it to happen. This joke represents the view of

Which of the following is NOT an assumption of the classical model?

Which of the following is NOT an assumption of the classical model?

In the classical model, the aggregate supply curve is

The short-run and long-run aggregate supply curves remain stable, and a decrease in aggregate demand occurs. What is the result in the short run?

Other things being equal, if input prices rise in a country, then there would be

All items below will decrease short-run aggregate supply EXCEPT

A key component of the Keynesian model is that

Suppose that the current price level is 110, real GDP is $100 billion, and long-run aggregate supply is $95 billion. We can conclude that

-The three curves in the above figure are

An economy in long-run equilibrium experiences an increase in aggregate demand. According to the classical model,

Which of the following will NOT shift the Keynesian short-run aggregate supply curve?

In the classical view, flexible wage rates would assure

According to the classical model, prices and wages

Suppose we observe rising nominal GDP, a rising price level, and constant unemployment as a result of an increase in aggregate demand. We would conclude that the aggregate supply curve is

The classical model uses the assumption that

The short-run aggregate supply curve is horizontal if