Consumption, investment, government spending, exports, and imports are:

Which of the following statements is true?   Question options:   Keynes believed wages and prices are often too flexible - falling wages can cause a recession.   Keynes believed an economy could get stuck in a recessionary gap.   Keynes advocated running government surpluses in times of recession.   Keynes believed the economy is self-regulating.   b and c

Which of the following policies will shift the IS curve to the right a) An increase in the equilibrium level of income y* b) the central bank buys public debt c) an increase in government spending d) All of the choice are correct

Which of the following statements is inconsistent with the Classical Theory of Economics? supply creates its own demand the economy’s level of investment spending depends solely on the level of income. the economy will produce at the full-employment level of output. the economy has an environment of “laissez faire.”   According to the quantity theory of money, inflation is ultimately controlled by private firms who set prices. the monetary authorities who control the money supply. those who control output. the price of oil.   According to the quantity theory of money, the quantity of money determines the interest rate. level of output. price level. level of employment.   Which of the following statements is (are) correct? The equilibrium interest rate is the rate that equates the supply of funds with the demand for funds equates new saving with consumption equates private spending with investment All of the above     Keynesian Theory: multiple choices (5 points each)   When…

According to the classical economists, the supply curve is vertical at the level of potential GDP. What happens to the level of real output and price no matter where the demand curve is drawn?

Consider a simple Keynesian model with taxation. Suppose the marginal rate of tax is 0.2 and the marginal propensity to consume is 0.5. Then a decrease in investment expenditure of 100 units will: Group of answer choices   None of the other options   Increase equilibrium output by approximately 150 units   Increase equilibrium output by approximately 167 units   Decrease equilibrium output by approximately 150 units

Compare and critically evaluate the position of the neoclassical and Keynesian economics regarding the proposals that the government budget should be balanced each year (i.e. no budget deficits).

In the aggregate expenditures model, all are true except: a)the price level is shown b)the equilibrium level of GDP can be determined c)the relationship between spending and production is presented d)the actual GDP can be compared to potential GDP

The graph above refers to a significant increase in individual income taxes, taking them to their highest level in 50 years. Which of the following is likely to result? a) macroeconomic supply will decrease in the short run b) the economy will experience lower economic growth c) inflationary pressures will be mild d) cyclical unemployment will decrease

In the classical model, an increase in aggregate demand will cause: OPTIONS: a decrease in price level. an increase in actual output, or Gross Domestic Product (GDP). an increase in price level. a decrease in actual output, or Gross Domestic Product (GDP).