Exam 19: The Keynesian Model in Action

Suppose that consumers become more pessimistic about the future and, as a result, reduce their consumption by $10 billion. If the marginal propensity to consume is 0.80, how will this $10 billion reduction in consumption affect the equilibrium level of real GDP?

(Multiple Choice)

4.9/5

(29)

Question 101

Assume that an economy's real GDP multiplier is 4. If this economy is in equilibrium at $2,000 billion, then which one of the following actions will bring it to a full employment equilibrium of $1,500 billion?

(Multiple Choice)

4.9/5

(41)

Question 102

Which of the following correctly describes the spending multiplier?

(Multiple Choice)

4.8/5

(36)

Question 103

Within the Keynesian aggregate expenditure-output model, if an economy operates below full employment:

(Multiple Choice)

4.8/5

(34)

Question 104

The relationship between aggregate expenditures and disposable income is shown by the:

(Multiple Choice)

4.9/5

(33)

Question 105

Showing 101 - 105 of 105

Suppose that consumers become more pessimistic about the future and, as a result, reduce their consumption by $10 billion. If the marginal propensity to consume is 0.80, how will this $10 billion reduction in consumption affect the equilibrium level of real GDP?

Assume that an economy's real GDP multiplier is 4. If this economy is in equilibrium at $2,000 billion, then which one of the following actions will bring it to a full employment equilibrium of $1,500 billion?

Which of the following correctly describes the spending multiplier?

Within the Keynesian aggregate expenditure-output model, if an economy operates below full employment:

The relationship between aggregate expenditures and disposable income is shown by the:

Introducing the Economic Way of Thinking

Production Possibilities Opportunity Cost and Economic Growth

Market Demand and Supply

Markets in Action

Price Elasticity of Demand and Supply

Consumer Choice Theory

Production Costs

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Labor Markets

Income Distribution Poverty and Discrimination

Antitrust and Regulation

Environmental Economics

Gross Domestic Product

Business Cycles and Unemployment

Inflation

The Keynesian Model

Aggregate Demand and Supply

Fiscal Policy

The Public Sector

Federal Deficits Surpluses and the National Debt

Money and the Federal Reserve System

Money Creation

Monetary Policy

The Phillips Curve and Expectations Theory

International Trade and Finance

Economies in Transition

Growth and the Less Developed Countries

Understanding Direct and Inverse Relationships between Variables

Filters