A) Investment and Spending B) Imports and Spending. C) Interest and Saving D) Investment and Saving. A) Investment and Spending B) Imports and Spending. C) Interest and Saving D) Investment and Saving.

Exam 32: Keynesian Economics and the Is-Lm Analysis

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If the marginal propensity to consume in the economy is 0.8 and the government increases its spending this year by €10 billion, what will be the additional increase in expenditure in the economy next year?

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(Multiple Choice)

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Question 1

Correct Answer:

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What is the relationship between the production possibilities frontier and the deflationary gap?

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Question 2

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When there is a deflationary gap the economy is not operating at full employment output. There must be spare capacity in the economy. Signs would be high unemployment, wasted land and underused productive capacity. This is equivalent to an economy operating inside its production possibilities frontier.

If the economy was in equilibrium where an inflationary gap existed then Keynes would argue that governments should cut public spending and increase taxation to reduce the expenditure line to reduce the gap.

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Question 3

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The slope of the IS curve is dependent upon:

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Question 4

Refer to figure 2 below. Which of the following statements is NOT true? Figure 2

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Question 5

If a central bank wants to reduce interest rates it will instruct its traders to:

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Question 6

What did Keynes mean by an inflationary and deflationary gap?

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Question 7

A key element of Keynesian analysis relates to:

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Question 8

Which of the following will generate a multiplier effect in the European economy?

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Question 9

Which of the following statements about the 45 degree line is true?

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Question 10

Keynes believed that a key element of unemployment was a deficiency in the level of aggregate demand which governments could and should rectify.

(True/False)

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Question 11

Figure 4 Refer to figure 4 above. Figure 4 shows the IS-LM model. Which of the following statements about the figure is NOT true?

(Multiple Choice)

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Question 12

IS stands for:

(Multiple Choice)

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Question 13

John Maynard Keynes' General Theory was an attempt to explain how economies operate at equilibrium in the long run.

(True/False)

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Question 14

Refer to figure 1 below. If the vertical distance labelled Z represents a deflationary gap then which of the following statements is true? Figure 1

(Multiple Choice)

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Question 15

Figure 4 Refer to figure 4 above. Assuming that Y₂ represents a level of national income lower than the full employment level, and that inflation has remained unchanged after the event that caused the IS curve to shift, what should the monetary authorities do if they wish to reduce unemployment?

(Multiple Choice)

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Question 16

The IS-MP model differs from the IS-LM model in that it is assumed

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Question 17

Explain how the aggregate demand curve is derived from the IS-LM model.

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Question 18

The slope of the expenditure line is dependent upon:

(Multiple Choice)

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Question 19

Which of the following will not weaken the value of the multiplier in an economy in response to a change in autonomous spending?

(Multiple Choice)

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Question 20

Showing 1 - 20 of 60

Exam 32: Keynesian Economics and the Is-Lm Analysis

If the marginal propensity to consume in the economy is 0.8 and the government increases its spending this year by €10 billion, what will be the additional increase in expenditure in the economy next year?

What is the relationship between the production possibilities frontier and the deflationary gap?

If the economy was in equilibrium where an inflationary gap existed then Keynes would argue that governments should cut public spending and increase taxation to reduce the expenditure line to reduce the gap.

The slope of the IS curve is dependent upon:

Refer to figure 2 below. Which of the following statements is NOT true? Figure 2

If a central bank wants to reduce interest rates it will instruct its traders to:

What did Keynes mean by an inflationary and deflationary gap?

A key element of Keynesian analysis relates to:

Which of the following will generate a multiplier effect in the European economy?

Which of the following statements about the 45 degree line is true?

Keynes believed that a key element of unemployment was a deficiency in the level of aggregate demand which governments could and should rectify.

Figure 4 ​ ​ Refer to figure 4 above. Figure 4 shows the IS-LM model. Which of the following statements about the figure is NOT true?

IS stands for:

John Maynard Keynes' General Theory was an attempt to explain how economies operate at equilibrium in the long run.

Refer to figure 1 below. If the vertical distance labelled Z represents a deflationary gap then which of the following statements is true? Figure 1

The IS-MP model differs from the IS-LM model in that it is assumed

Explain how the aggregate demand curve is derived from the IS-LM model.

The slope of the expenditure line is dependent upon:

Which of the following will not weaken the value of the multiplier in an economy in response to a change in autonomous spending?

What Is Economics

Thinking Like an Economist

The Market Forces of Supply and Demand

Elasticity and Its Applications

Background to Demand: Consumer Choices

Background to Supply: Firms in Competitive Markets

Consumers, Producers and the Efficiency of Markets

Supply, Demand and Government Policies

The Tax System

Public Goods, Common Resources and Merit Goods

Market Failure and Externalities

Information and Behavioural Economics

Firms Production Decisions

Market Structures I: Monopoly

Market Structures Ii: Monopolistic Competition

Market Structures Iii: Oligopoly

The Economics of Factor Markets

Income Inequality and Poverty

Interdependence and the Gains From Trade

Measuring a Nations Well-Being

Measuring the Cost of Living

Production and Growth

Unemployment

Saving, Investment and the Financial System

The Basic Tools of Finance

Issues in Financial Markets

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Business Cycles

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Trade-Off Between Inflation and Unemployment

Supply-Side Policies

Common Currency Areas and European Monetary Union

The Financial Crisis and Sovereign Debt

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Figure 4 Refer to figure 4 above. Figure 4 shows the IS-LM model. Which of the following statements about the figure is NOT true?