Exam 5: Keynesian System I: the Role of Aggregate Demand

If the marginal propensity to save is equal to 0.5 in the simple Keynesian model,then a 10-unit increase in government spending will cause output to rise by

In the equation Y = C + I + G,

The marginal propensity to consume is

The equation for the balanced budget multiplier can be written as

In the simple Keynesian model,if the equilibrium level of income is $300 billion,the MPC is 0.75,and government expenditures increase by 20 billion.What is the new equilibrium level of income?

When comparing the autonomous expenditure multiplier in a closed-economy model to the autonomous expenditure multiplier in an open-economy model it can be concluded that

According to Keynes,the least variable component of aggregate expenditures is

Assume that b = .75 and autonomous investment increases by $500 billion.By how much does equilibrium income increase? How much would this increase in investment increase income if b = .80 instead?

In the Keynesian aggregate expenditure graph (Figure 5-5)(in the text),the 45 degree line is meant to indicate that:

If policy makers desire a $30 increase in output and the consumption function is C = 100 + .75(Y-T),then they must

According to Keynes,the consumption-income relationship is shown as C = a + bY_D.Therefore,the saving-income relationship is

Discuss the role of the price level and interest rates in the simple model of aggregate demand developed in this chapter.How do Keynesians justify this behavior?

An increase in the interest rate leads to:

Which of the following statements is (are)incorrect?

Assuming that C + I + G > C + I_r + G,then

The most important determinant of any multiplier in the Keynesian model is

In the Keynesian model,changes in aggregate supply

Which of the following does not impact aggregate demand in the Keynesian model?

Which of the following are equilibrium conditions in the simple Keynesian model?

Keynes believed that the instability in income was caused by variability in