Question 1

-Identify the 3 curves in the above figure.

Accepted Answer

A)  (1) is long-run aggregate supply, (2) is short-run aggregate supply, (3) is aggregate demand. 
B)  (1) is aggregate demand, (2) is short-run aggregate supply, (3) is long-run aggregate supply. 
C)  (1) is short-run aggregate supply, (2) is long-run aggregate supply, (3) is aggregate demand. 
D)  (1) is long-run aggregate supply, (2) is aggregate demand, (3) is short-run aggregate supply. 
A)  (1) is long-run aggregate supply, (2) is short-run aggregate supply, (3) is aggregate demand. 
B)  (1) is aggregate demand, (2) is short-run aggregate supply, (3) is long-run aggregate supply. 
C)  (1) is short-run aggregate supply, (2) is long-run aggregate supply, (3) is aggregate demand. 
D)  (1) is long-run aggregate supply, (2) is aggregate demand, (3) is short-run aggregate supply.

Question 2

Suppose the government increases government spending. Which of the following will tend to occur as a result of this policy in a Keynesian model?

Accepted Answer

A)  an inflationary gap 
B)  demand-pull inflation 
C)  a movement along the short-run aggregate supply curve 
D)  all of the above 
A)  an inflationary gap 
B)  demand-pull inflation 
C)  a movement along the short-run aggregate supply curve 
D)  all of the above

Question 3

Which of the following decreases aggregate supply?

Accepted Answer

A)  discoveries of new natural resources 
B)  an increase in competition 
C)  an increase in educational attainment 
D)  a decrease in labor supply 
A)  discoveries of new natural resources 
B)  an increase in competition 
C)  an increase in educational attainment 
D)  a decrease in labor supply

Question 4

In the Keynesian model, an aggregate demand shock

Accepted Answer

A)  will cause the aggregate demand curve to shift, leading to a change in the price level and real GDP. 
B)  will cause the aggregate demand curve to shift, leading to a change in the price level but not real GDP. 
C)  will cause the aggregate demand curve to shift, leading to a change in real GDP but not the price level. 
D)  will not lead to a shift of the aggregate demand curve. 
A)  will cause the aggregate demand curve to shift, leading to a change in the price level and real GDP. 
B)  will cause the aggregate demand curve to shift, leading to a change in the price level but not real GDP. 
C)  will cause the aggregate demand curve to shift, leading to a change in real GDP but not the price level. 
D)  will not lead to a shift of the aggregate demand curve.

Question 5

Economic growth due to labor force expansion or capital investments will result in I. A leftward shift of short-run aggregate supply.
II) A rightward shift in long-run aggregate supply.

Accepted Answer

A)  I only 
B)  II only 
C)  Both I and II 
D)  Neither I nor II 
A)  I only 
B)  II only 
C)  Both I and II 
D)  Neither I nor II

Question 6

The approach to understanding the determination of real GDP and the price level that emphasizes flexible wages and prices and competitive markets is

Accepted Answer

A)  the classical model. 
B)  the Keynesian model. 
C)  Adam Smith's Law. 
D)  Murphy's Law. 
A)  the classical model. 
B)  the Keynesian model. 
C)  Adam Smith's Law. 
D)  Murphy's Law.

Question 7

Keynesian economists argue that

Accepted Answer

A)  equilibrium real GDP is demand-determined. 
B)  equilibrium real GDP is supply-determined. 
C)  equilibrium real GDP can be reached only in a theoretical economy. 
D)  reaching equilibrium real GDP always results in inflation. 
A)  equilibrium real GDP is demand-determined. 
B)  equilibrium real GDP is supply-determined. 
C)  equilibrium real GDP can be reached only in a theoretical economy. 
D)  reaching equilibrium real GDP always results in inflation.

Question 8

The simplified Keynesian model

Accepted Answer

A)  holds the price level constant. 
B)  holds real GDP constant. 
C)  assumes investment and saving are always equal. 
D)  assumes unemployment is unrelated to real GDP. 
A)  holds the price level constant. 
B)  holds real GDP constant. 
C)  assumes investment and saving are always equal. 
D)  assumes unemployment is unrelated to real GDP.

Exam 11: Classical and Keynesian Macro Analyses

-Identify the 3 curves in the above figure.

Suppose the government increases government spending. Which of the following will tend to occur as a result of this policy in a Keynesian model?

Which of the following decreases aggregate supply?

In the Keynesian model, an aggregate demand shock

Economic growth due to labor force expansion or capital investments will result in I. A leftward shift of short-run aggregate supply. II) A rightward shift in long-run aggregate supply.

The approach to understanding the determination of real GDP and the price level that emphasizes flexible wages and prices and competitive markets is

Keynesian economists argue that

The simplified Keynesian model

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Extensions of Demand and Supply Analysis

Public Spending and Public Choice

Funding the Public Sector

The Macroeconomy: Unemployment, Inflation, and Deflation

Measuring the Economys Performance

Global Economic Growth and Development

Real GDP and the Price Level in the Long Run

Consumption, Real GDP, and the Multiplier

Fiscal Policy

Deficit Spending and the Public Debt

Money, Banking, and Central Banking

Domestic and International Dimensions of Monetary Policy

Stabilization in an Integrated World Economy

Policies and Prospects for Global Economic Growth

Demand and Supply Elasticity

Consumer Choice

Rents, Profits, and the Financial Environment of Business

The Firm: Cost and Output Determination

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Regulation and Antitrust Policy in a Globalized Economy

The Labor Market: Demand, Supply and Outsourcing

Unions and Labor Market Monopoly Power

Income, Poverty, and Health Care

Environmental Economics

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

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