Question 1

Exhibit 10-3
  
-Refer to Exhibit 10-3.When disposable income equals $2,000,saving equals

Accepted Answer

A)  -$20. 
B)  -$40. 
C)  0. 
D)  $40. 
E)  $20. 
A)  -$20. 
B)  -$40. 
C)  0. 
D)  $40. 
E)  $20.

Question 2

The answer is: "It is sometimes in the best interest of business firms to pay their employees higher-than-equilibrium wage rates." What is the question?

Accepted Answer

A)  What do efficiency wage models imply? 
B)  What do classical economists say? 
C)  What is the central tenet of Say's law? 
D)  What did John Maynard Keynes say was the reason for inflexible wages? 
E)  none of the above 
A)  What do efficiency wage models imply? 
B)  What do classical economists say? 
C)  What is the central tenet of Say's law? 
D)  What did John Maynard Keynes say was the reason for inflexible wages? 
E)  none of the above

Question 3

Exhibit 10-9
  
-Refer to Exhibit 10-9.What is the value of the marginal propensity to save (MPS)that would correctly fill in blank (A)and the multiplier that would correctly fill in blank (B)?

Accepted Answer

A)  0.20; 5 
B)  0.08; 8 
C)  0.08; 12.5 
D)  0.05; 0.95 
A)  0.20; 5 
B)  0.08; 8 
C)  0.08; 12.5 
D)  0.05; 0.95

Question 4

The more firms that pay efficiency wages,the

Accepted Answer

A)  more likely the economy will get stuck in a recessionary gap. 
B)  less likely the economy will get stuck in a recessionary gap. 
C)  more likely the economy will get stuck in an inflationary gap. 
D)  more likely (over time) the economy will produce Natural Real GDP. 
E)  b and c 
A)  more likely the economy will get stuck in a recessionary gap. 
B)  less likely the economy will get stuck in a recessionary gap. 
C)  more likely the economy will get stuck in an inflationary gap. 
D)  more likely (over time) the economy will produce Natural Real GDP. 
E)  b and c

Question 5

Which statement is consistent with what Keynes believed about consumption and disposable income?

Accepted Answer

A)  Consumption depends upon disposable income and falls as disposable income rises. 
B)  Consumption rises by the same amount as disposable income rises. 
C)  Consumption rises by less than disposable income rises. 
D)  Disposable income depends upon consumption. 
A)  Consumption depends upon disposable income and falls as disposable income rises. 
B)  Consumption rises by the same amount as disposable income rises. 
C)  Consumption rises by less than disposable income rises. 
D)  Disposable income depends upon consumption.

Question 6

John Maynard Keynes was the son of

Accepted Answer

A)  one of the first female students to attend Cambridge University. 
B)  Russian ballerina Lydia Lopokova. 
C)  the mayor of London. 
D)  an eminent economist. 
E)  a and d 
A)  one of the first female students to attend Cambridge University. 
B)  Russian ballerina Lydia Lopokova. 
C)  the mayor of London. 
D)  an eminent economist. 
E)  a and d

Question 7

Exhibit 10-1
  
-Refer to Exhibit 10-1.Equilibrium Real GDP occurs at

Accepted Answer

A)  Q1. 
B)  Q2. 
C)  Q3. 
D)  Q1 and Q3. 
E)  none of the above 
A)  Q1. 
B)  Q2. 
C)  Q3. 
D)  Q1 and Q3. 
E)  none of the above

Question 8

Which of the following is true?

Accepted Answer

A)  If MPC = 0.50, then the multiplier is 2.00. 
B)  If MPC = 0.82, then the multiplier is 1.25. 
C)  If MPS = 0.35, then the multiplier is 2.86. 
D)  If MPC = 0.97, then the multiplier is 3.33. 
E)  a and c 
A)  If MPC = 0.50, then the multiplier is 2.00. 
B)  If MPC = 0.82, then the multiplier is 1.25. 
C)  If MPS = 0.35, then the multiplier is 2.86. 
D)  If MPC = 0.97, then the multiplier is 3.33. 
E)  a and c

Question 9

Exhibit 10-8
  
-Refer to Exhibit 10-8.The marginal propensity to save (MPS)is

Accepted Answer

A)  0.90. 
B)  0.10. 
C)  0.75. 
D)  0.25. 
E)  4.00. 
A)  0.90. 
B)  0.10. 
C)  0.75. 
D)  0.25. 
E)  4.00.

Question 10

In the simple Keynesian model,there are three simplifying assumptions. Among these assumptions is:

Accepted Answer

A)  the price level is flexible 
B)  no foreign sector 
C)  the price level is constant until the economy reaches its full-employment level 
D)  the money supply always rises 
E)  b and c 
A)  the price level is flexible 
B)  no foreign sector 
C)  the price level is constant until the economy reaches its full-employment level 
D)  the money supply always rises 
E)  b and c

Question 11

Keynes asserted that investment is more responsive to business expectations,technological changes and innovation,than to changes in interest rates.

Accepted Answer

A) True 
 B)False

Question 12

For Say's law to hold in a money economy,

Accepted Answer

A)  funds invested must give rise to an equal amount of funds spent. 
B)  funds saved must give rise to an equal amount of funds invested. 
C)  funds spent must give rise to an equal amount of output produced. 
D)  interest rates must fall when saving decreases. 
E)  b and c 
A)  funds invested must give rise to an equal amount of funds spent. 
B)  funds saved must give rise to an equal amount of funds invested. 
C)  funds spent must give rise to an equal amount of output produced. 
D)  interest rates must fall when saving decreases. 
E)  b and c

Question 13

The classical economists believed __________ determined savings,while Keynes said it was __________.

Accepted Answer

A)  interest rates; income 
B)  income; investment 
C)  investment; interest rates 
D)  interest rates; investment 
A)  interest rates; income 
B)  income; investment 
C)  investment; interest rates 
D)  interest rates; investment

Question 14

Many economists argue that the labor market may take a long time for wages to adjust to new equilibrium level.

Accepted Answer

A) True 
 B)False

Question 15

If autonomous consumption rises,the TE curve shifts __________,the marginal propensity to consume __________,and the TP curve __________.

Accepted Answer

A)  upward; rises; shifts downward 
B)  upward; remains unchanged; remains unchanged 
C)  downward; rises; remains unchanged 
D)  upward; remains unchanged; shifts downward 
E)  none of the above 
A)  upward; rises; shifts downward 
B)  upward; remains unchanged; remains unchanged 
C)  downward; rises; remains unchanged 
D)  upward; remains unchanged; shifts downward 
E)  none of the above

Question 16

The horizontal investment curve used to derive the TE curve means investment is

Accepted Answer

A)  directly related to Real GDP. 
B)  indirectly related to Real GDP. 
C)  independent of Real GDP. 
D)  sometimes directly and sometimes indirectly related to Real GDP, depending upon whether it is planned capital or planned inventory investment. 
A)  directly related to Real GDP. 
B)  indirectly related to Real GDP. 
C)  independent of Real GDP. 
D)  sometimes directly and sometimes indirectly related to Real GDP, depending upon whether it is planned capital or planned inventory investment.

Question 17

Autonomous consumption is

Accepted Answer

A)  the change in consumption that results as a person's (or nation's) income increases or decreases. 
B)  that portion of total consumption that is dependent upon the level of income. 
C)  the steady increase in the consumption of goods and services that automatically occurs as a person grows from a child to an adult. 
D)  that portion of total consumption that is independent of the level of income. 
A)  the change in consumption that results as a person's (or nation's) income increases or decreases. 
B)  that portion of total consumption that is dependent upon the level of income. 
C)  the steady increase in the consumption of goods and services that automatically occurs as a person grows from a child to an adult. 
D)  that portion of total consumption that is independent of the level of income.

Question 18

Exhibit 10-9
  
-Refer to Exhibit 10-9.What is the value of the marginal propensity to consume (MPC)that would correctly fill in blank (G)and the value of the multiplier that would correctly fill in blank (H)?

Accepted Answer

A)  0.80; 20 
B)  0.80; 5 
C)  0.20; 0.80 
D)  0.50; 0.50 
E)  There is not enough information given to answer this question. 
A)  0.80; 20 
B)  0.80; 5 
C)  0.20; 0.80 
D)  0.50; 0.50 
E)  There is not enough information given to answer this question.

Question 19

Keynes believed that investment is

Accepted Answer

A)  dependent on a number of factors, including business expectations. 
B)  mainly determined by changes in interest rates. 
C)  unrelated to business expectations. 
D)  related to business expectations only during recessionary periods. 
A)  dependent on a number of factors, including business expectations. 
B)  mainly determined by changes in interest rates. 
C)  unrelated to business expectations. 
D)  related to business expectations only during recessionary periods.

Question 20

How does the classical position on saving differ from Keynes's position?

Accepted Answer

A)  Classical position: people save more at lower interest rates. Keynes's position: people save less at lower interest rates. 
B)  Classical position: changes in the interest rate are irrelevant to saving decisions. Keynes's position: saving is directly related to the interest rate. 
C)  Classical position: saving is directly related to the interest rate. Keynes's position: at times, saving may be inversely related to the interest rate. 
D)  Classical position: saving can be inversely related to the interest rate. Keynes's position: consumption rises as saving rises. 
E)  none of the above 
A)  Classical position: people save more at lower interest rates. Keynes's position: people save less at lower interest rates. 
B)  Classical position: changes in the interest rate are irrelevant to saving decisions. Keynes's position: saving is directly related to the interest rate. 
C)  Classical position: saving is directly related to the interest rate. Keynes's position: at times, saving may be inversely related to the interest rate. 
D)  Classical position: saving can be inversely related to the interest rate. Keynes's position: consumption rises as saving rises. 
E)  none of the above

Exam 10: Keynesian Macroeconomics and Economic Instability: A Critique of the Self-Regulating Economy

Exhibit 10-3 -Refer to Exhibit 10-3.When disposable income equals $2,000,saving equals

The answer is: "It is sometimes in the best interest of business firms to pay their employees higher-than-equilibrium wage rates." What is the question?

Exhibit 10-9 -Refer to Exhibit 10-9.What is the value of the marginal propensity to save (MPS)that would correctly fill in blank (A)and the multiplier that would correctly fill in blank (B)?

The more firms that pay efficiency wages,the

Which statement is consistent with what Keynes believed about consumption and disposable income?

John Maynard Keynes was the son of

Exhibit 10-1 -Refer to Exhibit 10-1.Equilibrium Real GDP occurs at

Which of the following is true?

Exhibit 10-8 -Refer to Exhibit 10-8.The marginal propensity to save (MPS)is

In the simple Keynesian model,there are three simplifying assumptions. Among these assumptions is:

Keynes asserted that investment is more responsive to business expectations,technological changes and innovation,than to changes in interest rates.

For Say's law to hold in a money economy,

The classical economists believed __________ determined savings,while Keynes said it was __________.

Many economists argue that the labor market may take a long time for wages to adjust to new equilibrium level.

If autonomous consumption rises,the TE curve shifts __________,the marginal propensity to consume __________,and the TP curve __________.

The horizontal investment curve used to derive the TE curve means investment is

Autonomous consumption is

Exhibit 10-9 -Refer to Exhibit 10-9.What is the value of the marginal propensity to consume (MPC)that would correctly fill in blank (G)and the value of the multiplier that would correctly fill in blank (H)?

Keynes believed that investment is

How does the classical position on saving differ from Keynes's position?

What Economics Is About

Production Possibilities Frontier Framework

Supply and Demand: Theory

Prices: Free, Controlled, and Relative

Supply, Demand, and Price: Applications

Macroeconomic Measurements: Prices and Unemployment

Macroeconomic Measurements: GDP and Real GDP

Aggregate Demand and Aggregate Supply

Classical Macroeconomics and the Self Regulating Economy

Fiscal Policy and the Federal Budget

Money, Banking,and the Financial System

The Federal Reserve System

Money and the Economy

Monetary Policy

Expectations Theory and the Economy

Economic Growth: Resources, Technology, Ideas, and Institutions

The Financial Crisis of 2007-2009

Debates in Macroeconomics Over the Role and Effects of Government

Elasticity

Consumer Choice: Maximizing Utility and Behavioral Economics

Production and Costs

Perfect Competition

Monopoly

Monopolistic Competition, Oligopoly, and Game Theory

Government and Product Markets: Antitrust and Regulation

Factor Markets: With Emphasis on the Labor Market

Wages,Unions,and Labor

The Distribution of Income and Poverty

Interest, Rent, and Profit

Market Failure: Externalities, Public Goods, and Asymmetric Information

Public Choice and Special-Interest-Group Politics

Building Theories to Explain Everyday Life: From Observations to Questions to Theories to Predictions

International Trade

International Finance

Globalization and International Impacts on the Economy

The Economic Case For and Against Government: Five Topics Considered

Stocks, Bonds, Futures, and Options

Agriculture: Problems, Policies, and Unintended Effects

Filters

The classical economists believed determined savings,while Keynes said it was .

If autonomous consumption rises,the TE curve shifts ,the marginal propensity to consume ,and the TP curve __.