Question 1

The classical model differs from the Keynesian model in that

Accepted Answer

A) monetary policy does not impact output in the Keynesian model. 
B) the classical model focuses on the long-run and the Keynesian model focuses on the short-run. 
C) fiscal policy is more powerful in the classical model than in the Keynesian model. 
D) the classical model believes monetary policy is a powerful impact on output and fiscal policy is not. 
E) None of the above 
A) monetary policy does not impact output in the Keynesian model. 
B) the classical model focuses on the long-run and the Keynesian model focuses on the short-run. 
C) fiscal policy is more powerful in the classical model than in the Keynesian model. 
D) the classical model believes monetary policy is a powerful impact on output and fiscal policy is not. 
E) None of the above

Question 2

An decrease in the price of oil on the world market would cause aggregate output to

Accepted Answer

A) rise and the aggregate demand to rise. 
B) rise and the aggregate demand to rise 
C) rise and the aggregate supply to rise. 
D) fall and the aggregate supply to fall. 
A) rise and the aggregate demand to rise. 
B) rise and the aggregate demand to rise 
C) rise and the aggregate supply to rise. 
D) fall and the aggregate supply to fall.

Question 3

Which of the following explains why the AD curve is downward sloping?

Accepted Answer

A) a lower price level forces the government to reduce taxes,shifting the IS curve to the right and increasing income. 
B) A lower price level forces the central bank to increase the money supply,shifting the LM curve to the right and increasing income. 
C) A lower price level increases real money balances,shifting the LM curve to the right and increasing income. 
D) none of the above are correct. 
A) a lower price level forces the government to reduce taxes,shifting the IS curve to the right and increasing income. 
B) A lower price level forces the central bank to increase the money supply,shifting the LM curve to the right and increasing income. 
C) A lower price level increases real money balances,shifting the LM curve to the right and increasing income. 
D) none of the above are correct.

Question 4

What is the key difference between the classical and Keynesian aggregate supply functions? What is the key factor that drives these differences?

Accepted Answer

The main difference between the classica

Question 5

In the Keynesian model,if the actual price level is higher than the expected price level,then

Accepted Answer

A) output is above potential output. 
B) output is always at potential output. 
C) output is below potential output. 
D) output is moving towards potential output. 
A) output is above potential output. 
B) output is always at potential output. 
C) output is below potential output. 
D) output is moving towards potential output.

Question 6

Assuming a horizontal aggregate supply curve,output will change when

Accepted Answer

A) monetary or fiscal policy changes. 
B) monetary policy changes. 
C) fiscal policy changes. 
D) capital,labor,or technology changes. 
E) all of the above 
A) monetary or fiscal policy changes. 
B) monetary policy changes. 
C) fiscal policy changes. 
D) capital,labor,or technology changes. 
E) all of the above

Question 7

If inflation and unemployment is rising at the same time,then this is most likely the result of a shift

Accepted Answer

A) downward in the aggregate demand schedule. 
B) upward in the aggregate demand schedule. 
C) downward in the aggregate supply schedule. 
D) upward in the aggregate supply schedule. 
E) none of the above can explain this 
A) downward in the aggregate demand schedule. 
B) upward in the aggregate demand schedule. 
C) downward in the aggregate supply schedule. 
D) upward in the aggregate supply schedule. 
E) none of the above can explain this

Question 8

In the IS-LM model,the implicit assumption made about aggregate supply was that the

Accepted Answer

A) aggregate supply schedule was vertical because prices were flexible. 
B) aggregate supply schedule was horizontal because prices were fixed. 
C) aggregate supply schedule was upward sloping to the right because wages and prices were fixed. 
D) supply of output was fixed. 
E) none of the above. 
A) aggregate supply schedule was vertical because prices were flexible. 
B) aggregate supply schedule was horizontal because prices were fixed. 
C) aggregate supply schedule was upward sloping to the right because wages and prices were fixed. 
D) supply of output was fixed. 
E) none of the above.

Question 9

In the Keynesian model with both a variable price level and money wage,the aggregate supply function will be

Accepted Answer

A) upward sloping but flatter than for the variable-price/fixed-wage version of the model. 
B) upward sloping but steeper than for the variable-wage/fixed-price version of the model. 
C) vertical. 
D) horizontal. 
A) upward sloping but flatter than for the variable-price/fixed-wage version of the model. 
B) upward sloping but steeper than for the variable-wage/fixed-price version of the model. 
C) vertical. 
D) horizontal.

Question 10

In the contract theory of wages,if workers and firms agree to enter into contracts in which their money wage adjusts automatically to changes in the actual price level,then aggregate supply

Accepted Answer

A) slopes upward and to the right. 
B) shifts upward. 
C) is horizontal. 
D) is vertical. 
A) slopes upward and to the right. 
B) shifts upward. 
C) is horizontal. 
D) is vertical.

Question 11

According to the Keynesian fixed wage theory,real wages should be

Accepted Answer

A) positively correlated with income. 
B) not correlated with income. 
C) fixed. 
D) negatively correlated with income. 
A) positively correlated with income. 
B) not correlated with income. 
C) fixed. 
D) negatively correlated with income.

Question 12

The position of the Keynesian aggregate demand schedule does not depend on the

Accepted Answer

A) level of government spending. 
B) level of tax collections. 
C) level of autonomous investment expenditures. 
D) quantity of money. 
E) the price of inputs such as oil. 
A) level of government spending. 
B) level of tax collections. 
C) level of autonomous investment expenditures. 
D) quantity of money. 
E) the price of inputs such as oil.

Question 13

If everyone expects prices to fall but they do not,then

Accepted Answer

A) nothing happens. 
B) the IS curve shifts to the left and the AD curve shifts to the right. 
C) both IS and AD shift to the right. 
D) both IS and AD shift to the left. 
E) the IS curve shifts to the right,the AD curve shifts to the left. 
A) nothing happens. 
B) the IS curve shifts to the left and the AD curve shifts to the right. 
C) both IS and AD shift to the right. 
D) both IS and AD shift to the left. 
E) the IS curve shifts to the right,the AD curve shifts to the left.

Question 14

Which of the following statements is (are)correct? Keynesian economists

Accepted Answer

A) favor neither active monetary policies nor active fiscal policies to stabilize the economy. 
B) favor both active monetary and fiscal policies to manage aggregate demand. 
C) are known as noninterventionists. 
D) are perceived as favoring smaller,less active government policy. 
E) Either b or d 
A) favor neither active monetary policies nor active fiscal policies to stabilize the economy. 
B) favor both active monetary and fiscal policies to manage aggregate demand. 
C) are known as noninterventionists. 
D) are perceived as favoring smaller,less active government policy. 
E) Either b or d

Question 15

If the classical model is correct,what should be the correlation between interest rates,the price level,real wages,and output over the business cycle? Provide graphs of the labor market,AD/AS,and IS/LM to illustrate.

Accepted Answer

In the classical model,changes in aggreg

Question 16

In the Keynesian model with a fixed price level and a fixed money wage,an increase in the money supply will cause

Accepted Answer

A) output to fall and interest rates to fall. 
B) output to remain unchanged. 
C) output to rise and the price level to fall. 
D) output to rise and interest rates to fall. 
A) output to fall and interest rates to fall. 
B) output to remain unchanged. 
C) output to rise and the price level to fall. 
D) output to rise and interest rates to fall.

Question 17

If business cycles are caused by changes in aggregate supply,you would expect to see

Accepted Answer

A) prices and unemployment moving in the same direction. 
B) price and unemployment moving in opposite directions. 
C) prices not moving with unemployment. 
D) unemployment is not included in the Keynesian model. 
A) prices and unemployment moving in the same direction. 
B) price and unemployment moving in opposite directions. 
C) prices not moving with unemployment. 
D) unemployment is not included in the Keynesian model.

The classical model differs from the Keynesian model in that

An decrease in the price of oil on the world market would cause aggregate output to

Which of the following explains why the AD curve is downward sloping?

What is the key difference between the classical and Keynesian aggregate supply functions? What is the key factor that drives these differences?

In the Keynesian model,if the actual price level is higher than the expected price level,then

Assuming a horizontal aggregate supply curve,output will change when

If inflation and unemployment is rising at the same time,then this is most likely the result of a shift

In the IS-LM model,the implicit assumption made about aggregate supply was that the

In the Keynesian model with both a variable price level and money wage,the aggregate supply function will be

In the contract theory of wages,if workers and firms agree to enter into contracts in which their money wage adjusts automatically to changes in the actual price level,then aggregate supply

According to the Keynesian fixed wage theory,real wages should be

The position of the Keynesian aggregate demand schedule does not depend on the

If everyone expects prices to fall but they do not,then

Which of the following statements is (are)correct? Keynesian economists

If the classical model is correct,what should be the correlation between interest rates,the price level,real wages,and output over the business cycle? Provide graphs of the labor market,AD/AS,and IS/LM to illustrate.

In the Keynesian model with a fixed price level and a fixed money wage,an increase in the money supply will cause

If business cycles are caused by changes in aggregate supply,you would expect to see

Introduction

Measurement of Macroeconomic Variables

Classical Macroeconomics I: Output and Employment

Classical Macroeconomics II: Money,prices,and Interest

Keynesian System I: the Role of Aggregate Demand

Keynesian System II: Money,interest,and Income

Keynesian System III: Policy Effects in the Is-Lm Model

The Monetarist Counterrevolution

Output,inflation,and Unemployment: Alternative Views

New Classical Economics

Real Business Cycles and New Keynesian Economics

Macroeconomic Models:a Summary

Exchange Rates and the International Monetary System

Monetary and Fiscal Policy in the Open Economy

Money,the Banking System,and Interest Rates

Optimal Monetary Policy

Fiscal Policy

Policies for Intermediate-Run Growth

Long-Run Economic Growth: Origins of the Wealth of Nations

Filters

Exam 8: Keynesian System Iv: Aggregate Supply and Demand

The classical model differs from the Keynesian model in that

An decrease in the price of oil on the world market would cause aggregate output to

Which of the following explains why the AD curve is downward sloping?

What is the key difference between the classical and Keynesian aggregate supply functions? What is the key factor that drives these differences?

In the Keynesian model,if the actual price level is higher than the expected price level,then

Assuming a horizontal aggregate supply curve,output will change when

If inflation and unemployment is rising at the same time,then this is most likely the result of a shift

In the IS-LM model,the implicit assumption made about aggregate supply was that the

In the Keynesian model with both a variable price level and money wage,the aggregate supply function will be

In the contract theory of wages,if workers and firms agree to enter into contracts in which their money wage adjusts automatically to changes in the actual price level,then aggregate supply

According to the Keynesian fixed wage theory,real wages should be

The position of the Keynesian aggregate demand schedule does not depend on the

If everyone expects prices to fall but they do not,then

Which of the following statements is (are)correct? Keynesian economists

If the classical model is correct,what should be the correlation between interest rates,the price level,real wages,and output over the business cycle? Provide graphs of the labor market,AD/AS,and IS/LM to illustrate.

In the Keynesian model with a fixed price level and a fixed money wage,an increase in the money supply will cause

If business cycles are caused by changes in aggregate supply,you would expect to see

Introduction

Measurement of Macroeconomic Variables

Classical Macroeconomics I: Output and Employment

Classical Macroeconomics II: Money,prices,and Interest

Keynesian System I: the Role of Aggregate Demand

Keynesian System II: Money,interest,and Income

Keynesian System III: Policy Effects in the Is-Lm Model

The Monetarist Counterrevolution

Output,inflation,and Unemployment: Alternative Views

New Classical Economics

Real Business Cycles and New Keynesian Economics

Macroeconomic Models:a Summary

Exchange Rates and the International Monetary System

Monetary and Fiscal Policy in the Open Economy

Money,the Banking System,and Interest Rates

Optimal Monetary Policy

Fiscal Policy

Policies for Intermediate-Run Growth

Long-Run Economic Growth: Origins of the Wealth of Nations

Filters