Keynesians: O a. accept the fact that policymakers should eliminate inflation first before focusing on unemployment. O b. focus on increasing aggregate demand in order to stimulate the economy. O c. believe that the level of aggregate demand in the 1930s was sufficient to generate full employment. d. accept the countercyclical policy of doing nothing, that is, allowing market forces to work.

Keynesians: O a. accept the fact that policymakers should eliminate inflation first before focusing on unemployment. O b. focus on increasing aggregate demand in order to stimulate the economy. O c. believe that the level of aggregate demand in the 1930s was sufficient to generate full employment. d. accept the countercyclical policy of doing nothing, that is, allowing market forces to work.

Economics: Private and Public Choice (MindTap Course List)

16th Edition

ISBN:9781305506725

Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Chapter11: Fiscal Policy: The Keynesian View And Historical Development Of Macroeconomics

Section: Chapter Questions

Problem 6CQ

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Critics of Keynesian economics argue that: O a. increases in government spending cause private sector investment to fall because the government pushes up interest rates. b. reductions in government spending cause private sector investment to fall because the government pushes up interest rates by borrowing. Oc increases in government spending increase infrastructure investment, which helps private sector investment. O d. reductions in government spending cut infrastructure investment, which hurts private sector investment.
According to the Keynesian model, which of the following would NOT increase aggregate demand? Government expands its social projects and increases taxes to balance the budget а. O b. A decrease in the number of employees in the government agencies c. Government drops the taxes for private businesses O d. Government establishes a new agency that helps the unemployed to find a job е. Government changes the laws whereby the tax of the interest earned becomes changes from a positive number to zero.
Which assumption is the Keynesian model based on? O people can afford a high level of government services. O prices and wages are sticky and do not adjust rapidly. O an increase in productivity will cause the aggregate demand curve to shift to the left. O an increase in input prices will cause the aggregate demand curve to shift to the left.
The ultimate goal of macroeconomic policy is to: OA. Maintain a stable positive economic growth rate with a consistent low inflation rate. O B. Lower the unemployment rate to be zero. Oc. Stabilize the inflation rate as zero. OD. Stimulate the economic growth rate as high as possible.
Back in the 1980s, the Ronald Reagan Administration reduced corporate taxes, which many economists believed increased production and profit for American companies and created economic growth. This statement BEST supports the view of: Select one: O a. Marginalists O b. Keynesian economists O c. Classical economists O d. Supply-side economists O e. Monetarists
One of the most important views expressed by classical macroeconomists was that OA wages and prices are always rising. O B. wages and prices are inflexible. OC supply creates its own demand. O D. demand creates its own supply.
What type of macroeconomics presents the view that the market economy works well, that aggregate fluctuations are a natural consequence of an expanding economy, and that government intervention cannot improve the efficiency of the market economy? macroeconomics is the view that the market economy works well, that aggregate fluctuations are a natural consequence of an expanding economy, and that government intervention cannot improve the efficiency of the market economy. O A. Monetarist B. Classical OC. Keynesian O D. Long-run Classical macroeconomics A. is currently championed by Paul Krugman in his weekly column in the New York Times B. had its beginnings with the 1936 publication The General Theory of Employment, Interest, and Money C. explains how the economy performs in the face of a major slump in spending D. fell into disrepute during the Great Depression Click to select your answer. MacBook Air DII DD 000 F11 F12 F7 F8 F9 F10 esc F4 F5 F6 F1 F2 F3 & ! @ # $ 5 7 8 delete 1 2 3 {…
Assume the following macroeconomic conditions in the United States and that US policy makers desire to achieve their three macro-policy goals defined in the usual way. A. Output has risen above potential output, creating a large positive output gap. B. The employment rate has risen, creating an unemployment rate of 3%. C. The inflation rate has risen to 8% per year. Which statement is CORRECT? O Output is too high; the unemployment rate is too low; and the inflation rate is too high. Output is too high; the employment rate is too low; and the inflation rate is too low. Output is too high; the employment rate is too low; and the inflation rate is too high. Output is too low; the unemployment rate is too low; and the inflation rate is too high. Output is too high; the unemployment rate is too low; and inflation rate is too low.
According to the Keynesian model, which answer might cause a recession but wouldn't cause inflation for Country X. O a decrease in interest rates O a decrease in a major trading partners export prices a major trading partner's economic slowdown O an increase in domestic investment
Match the policies below to whether they would be said by a Keynesian or Neoclassical economist: A. Policy should concentrate on minimizing cyclical unemployment B. Since the long-run aggregate supply curve is fixed, increasing aggregate demand too much will just lead to inflation 1. Neoclassical 2. Keynesian
In the simplest version of the Keynesian model, income is determined by: O A. consumer spending. O B. investment spending. O C. government spending D. consumer and investment spending. O E. consumer and government spending.
Countries like China and other developed economies are in the Neo classical zone. What is the best option for these countries to sustain their economies? a. Move back to intermediate zone O b. Decrease aggregate demand c. Move back to Keynesian Zone d. Increase aggregate supply