Question 1

John Maynard Keynes believed that wages may be inflexible in the downward direction.Consequently,an economy

Accepted Answer

A)  could get stuck in long-run equilibrium. 
B)  could get stuck in a recessionary gap. 
C)  could get stuck in an inflationary gap. 
D)  would always produce more than Natural Real GDP. 
E)  b and c 
A)  could get stuck in long-run equilibrium. 
B)  could get stuck in a recessionary gap. 
C)  could get stuck in an inflationary gap. 
D)  would always produce more than Natural Real GDP. 
E)  b and c

Question 2

-Refer to Exhibit 10-1.At Q2,there is a tendency for Real GDP to

Accepted Answer

A)  rise. 
B)  fall. 
C)  remain unchanged. 
D)  There is not enough information to answer this question. 
A)  rise. 
B)  fall. 
C)  remain unchanged. 
D)  There is not enough information to answer this question.

Question 3

-Refer to Exhibit 10-2.Which of the following is correct about point M?

Accepted Answer

A)  TE is $4,500 billion and TP is only $1,500 billion. 
B)  TP is $4,500 billion and TE is only $1,500 billion. 
C)  TE is $7,500 and TP is only $5,500 billion. 
D)  TP is only $7,500 billion and TE is only $5,500 billion. 
E)  TE is $3,000 billion and TP is only $1,500 billion. 
A)  TE is $4,500 billion and TP is only $1,500 billion. 
B)  TP is $4,500 billion and TE is only $1,500 billion. 
C)  TE is $7,500 and TP is only $5,500 billion. 
D)  TP is only $7,500 billion and TE is only $5,500 billion. 
E)  TE is $3,000 billion and TP is only $1,500 billion.

Question 4

Which of the following statements is false?

Accepted Answer

A)  Keynes believed that the level of investment depends on more than just the interest rate. 
B)  Saving is the difference between disposable income and consumption. 
C)  Keynes believed that saving is more responsive to changes in income than to changes in the interest rate. 
D)  According to Keynes,wage rates may fall too quickly when the economy is in a recessionary gap. 
A)  Keynes believed that the level of investment depends on more than just the interest rate. 
B)  Saving is the difference between disposable income and consumption. 
C)  Keynes believed that saving is more responsive to changes in income than to changes in the interest rate. 
D)  According to Keynes,wage rates may fall too quickly when the economy is in a recessionary gap.

Question 5

Describe Keynes' criticism of Say's law in a money economy.

Accepted Answer

In order for Say's law to hold in a mone

Question 6

-Refer to Exhibit 10-2.If autonomous investment decreases,the TE curve will shift ____________ and the new level of equilibrium Real GDP will be ___________ than $4,500.

Accepted Answer

A)  downward; greater 
B)  downward; less 
C)  upward; less 
D)  upward; greater 
A)  downward; greater 
B)  downward; less 
C)  upward; less 
D)  upward; greater

Question 7

-Refer to Exhibit 10-2.If autonomous consumption increases,the TE curve will shift ____________ and the new level of equilibrium Real GDP will be ___________ than $4,500.

Accepted Answer

A)  downward; greater 
B)  downward; less 
C)  upward; less 
D)  upward; greater 
A)  downward; greater 
B)  downward; less 
C)  upward; less 
D)  upward; greater

Question 8

-Refer to Exhibit 10-8.Autonomous consumption (Co)is equal to

Accepted Answer

A)  $4. 
B)  $40. 
C)  $400. 
D)  $4,000. 
E)  $2,000. 
A)  $4. 
B)  $40. 
C)  $400. 
D)  $4,000. 
E)  $2,000.

Question 9

According to Keynes,the private sector (by itself)

Accepted Answer

A)  can always move the economy out of a recessionary gap in a timely manner. 
B)  cannot always move the economy out of a recessionary gap in a timely manner. 
C)  can never move the economy out of a recessionary gap. 
D)  can only move the economy out of a recessionary gap if the SRAS curve drops. 
E)  can only move the economy out of a recessionary gap if the SRAS curve rises. 
A)  can always move the economy out of a recessionary gap in a timely manner. 
B)  cannot always move the economy out of a recessionary gap in a timely manner. 
C)  can never move the economy out of a recessionary gap. 
D)  can only move the economy out of a recessionary gap if the SRAS curve drops. 
E)  can only move the economy out of a recessionary gap if the SRAS curve rises.

Question 10

The consumption function is a function showing the relationship between consumption and

Accepted Answer

A)  disposable income. 
B)  exports. 
C)  interest rates. 
D)  investment. 
A)  disposable income. 
B)  exports. 
C)  interest rates. 
D)  investment.

Question 11

If autonomous consumption rises,the TE curve shifts __________,the marginal propensity to consume __________,and the TP curve __________.

Accepted Answer

A)  upward; rises; shifts downward 
B)  upward; remains unchanged; remains unchanged 
C)  downward; rises; remains unchanged 
D)  upward; remains unchanged; shifts downward 
E)  none of the above 
A)  upward; rises; shifts downward 
B)  upward; remains unchanged; remains unchanged 
C)  downward; rises; remains unchanged 
D)  upward; remains unchanged; shifts downward 
E)  none of the above

Question 12

Which of the following is consistent with Keynes's view of Say's law?

Accepted Answer

A)  Saving increases by $3 billion,consumption falls by $3 billion,and investment rises by $3 billion. 
B)  Consumption rises by $3 billion and saving rises by more than $3 billion. 
C)  Saving rises by $3 billion,consumption falls by $3 billion,and investment rises by something less than $3 billion. 
D)  Saving rises by $3 billion,consumption falls by $3 billion,and investment rises by $6 billion. 
E)  none of the above 
A)  Saving increases by $3 billion,consumption falls by $3 billion,and investment rises by $3 billion. 
B)  Consumption rises by $3 billion and saving rises by more than $3 billion. 
C)  Saving rises by $3 billion,consumption falls by $3 billion,and investment rises by something less than $3 billion. 
D)  Saving rises by $3 billion,consumption falls by $3 billion,and investment rises by $6 billion. 
E)  none of the above

Question 13

When the MPC = 0.75,the multiplier is

Accepted Answer

A)  0.25. 
B)  1.33. 
C)  2.50. 
D)  4.00. 
E)  5.00. 
A)  0.25. 
B)  1.33. 
C)  2.50. 
D)  4.00. 
E)  5.00.

Question 14

If households purchase $60,000 worth of consumer goods and firms produce $50,000 worth of consumer goods,then

Accepted Answer

A)  inventory changes are -$10,000. 
B)  inventory changes are +$10,000. 
C)  new capital goods expenditures (by firms)are $10,000. 
D)  consumer goods expenditures are $10,000. 
A)  inventory changes are -$10,000. 
B)  inventory changes are +$10,000. 
C)  new capital goods expenditures (by firms)are $10,000. 
D)  consumer goods expenditures are $10,000.

Question 15

-Refer to Exhibit 10-8.When disposable income equals $1,500,saving equals

Accepted Answer

A)  $1,800. 
B)  $1,600. 
C)  $100. 
D)  -$100. 
A)  $1,800. 
B)  $1,600. 
C)  $100. 
D)  -$100.

Question 16

In the simple Keynesian model,a rightward shift in the aggregate demand curve __________ result in a change in the price level when the economy is in the horizontal segment of the AS curve and ___________ result in a change in the price level if the economy is in the vertical segment of the AS curve.

Accepted Answer

A)  will not; will 
B)  will not; will not 
C)  will; will not 
D)  will; will 
A)  will not; will 
B)  will not; will not 
C)  will; will not 
D)  will; will

Question 17

Government purchases rise by $100 billion and the MPC equals 0.75.Assuming that idle resources exist at each expenditure round,and the multiplier is operative,the change in Real GDP equals

Accepted Answer

A)  $40 billion. 
B)  $75 billion. 
C)  $400 billion. 
D)  $750 billion. 
E)  $250 billion. 
A)  $40 billion. 
B)  $75 billion. 
C)  $400 billion. 
D)  $750 billion. 
E)  $250 billion.

Question 18

Keynes asserted that the interest rate is important in determining investment,but not as important as other variables.

Accepted Answer

A) True 
 B)False

Question 19

-Refer to Exhibit 10-4.Marginal propensity to consume is equal to

Accepted Answer

A)  AF divided by C0A. 
B)  C0A divided by AF. 
C)  AF divided by C0F. 
D)  C0F divided by AF. 
E)  none of the above 
A)  AF divided by C0A. 
B)  C0A divided by AF. 
C)  AF divided by C0F. 
D)  C0F divided by AF. 
E)  none of the above

Question 20

When the MPC = 0.6,the multiplier is

Accepted Answer

A)  0.40. 
B)  2.50. 
C)  1.67. 
D)  6.00. 
A)  0.40. 
B)  2.50. 
C)  1.67. 
D)  6.00.

Exam 10: Monopoly

John Maynard Keynes believed that wages may be inflexible in the downward direction.Consequently,an economy

-Refer to Exhibit 10-1.At Q2,there is a tendency for Real GDP to

-Refer to Exhibit 10-2.Which of the following is correct about point M?

Which of the following statements is false?

Describe Keynes' criticism of Say's law in a money economy.

-Refer to Exhibit 10-2.If autonomous investment decreases,the TE curve will shift ____________ and the new level of equilibrium Real GDP will be ___________ than $4,500.

-Refer to Exhibit 10-2.If autonomous consumption increases,the TE curve will shift ____________ and the new level of equilibrium Real GDP will be ___________ than $4,500.

-Refer to Exhibit 10-8.Autonomous consumption (Co)is equal to

According to Keynes,the private sector (by itself)

The consumption function is a function showing the relationship between consumption and

If autonomous consumption rises,the TE curve shifts __________,the marginal propensity to consume __________,and the TP curve __________.

Which of the following is consistent with Keynes's view of Say's law?

When the MPC = 0.75,the multiplier is

If households purchase $60,000 worth of consumer goods and firms produce $50,000 worth of consumer goods,then

-Refer to Exhibit 10-8.When disposable income equals $1,500,saving equals

Government purchases rise by $100 billion and the MPC equals 0.75.Assuming that idle resources exist at each expenditure round,and the multiplier is operative,the change in Real GDP equals

Keynes asserted that the interest rate is important in determining investment,but not as important as other variables.

-Refer to Exhibit 10-4.Marginal propensity to consume is equal to

When the MPC = 0.6,the multiplier is

What Economics Is About

Production Possibilities Frontier Framework

Supply and Demand: Theory

Prices: Free,controlled,and Relative

Supply,demand,and Price: Applications

Elasticity

Consumer Choice: Maximizing Utility and Behavioral Economics

Production and Costs

Perfect Competition

Monopolistic Competition, oligopoly, and Game Theory

Government and Product Markets: Antitrust and Regulation

Factor Markets: With Emphasis on the Labor Market

Wages,union,and Labor

The Distribution of Income and Poverty

Interest,rent,and Profit

Market Failure: Externalities, public Goods, and Asymmetric Information

Public Choice and Special-Interest-Group Politics

Building Theories to Explain Everyday Life: From Observations to Questions to Theories to Predictions

International Trade

International Finance

The Economic Case for and Against Government: Five Topics Considered

Stocks,bonds,futures,and Options

Stocks,bonds,futures,and Options

Filters

-Refer to Exhibit 10-1.At Q₂,there is a tendency for Real GDP to

-Refer to Exhibit 10-2.If autonomous investment decreases,the TE curve will shift __ and the new level of equilibrium Real GDP will be _ than $4,500.

-Refer to Exhibit 10-2.If autonomous consumption increases,the TE curve will shift __ and the new level of equilibrium Real GDP will be _ than $4,500.

-Refer to Exhibit 10-8.Autonomous consumption (C_o)is equal to

If autonomous consumption rises,the TE curve shifts ,the marginal propensity to consume ,and the TP curve __.