Exam 11: Classical and Keynesian Macro Analyses

Leakages in the circular flow model are

Which of the following statements is TRUE?

Which of the following actions would cause the aggregate demand curve to shift to the left?

A classical model of the economy predicts

In the above figure, what could cause the shift of aggregate demand from AD1 to AD2?

In the classical model

Which of the following will NOT shift the short-run aggregate supply (SRAS) curve?

Why is wage and price flexibility an important assumption of the classical model?

According to Keynesian economics, if there are unutilized resources in the economy and aggregate demand decreases

"According to Keynes, the economy is essentially a self-regulating system." Do you agree or disagree? Why?

In the classical model, what occurs if a wage of $20/hour results in unemployed workers?

In the classical model, what happens to the level of real GDP if aggregate demand increases?

Why did the classical economists think that large-scale unemployment was not possible in a market economy?

Which statement best characterizes the classical economists' view of saving and investment?

If you feel you are better off because you receive a 5 percent raise even when the price level also increases by 5 percent, then you are a victim of the

In the original Austin Powers, Dr. Evil is cryogenically frozen for thirty years (from the late 1960s to the late 1990s). Upon his return he hatches a plan to extort one million dollars from various world governments. His henchmen are unimpressed. What type(s) of inflation have made Dr. Evil's proposed blackmail amount seem too small?

The idea that supply creates its own demand is known as

-Which point or points on the above figure illustrate a short-run equilibrium?

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

Which of the following is NOT an event that causes BOTH the short-run aggregate supply (SRAS) curve and the long-run aggregate supply (LRAS) curve to shift?