Exam 11: Fiscal Policy: The Keynesian View and the Historical Development of Macroeconomics

If the government increases its spending, which of the following would tend to reduce the size of the multiplier?

If Congress votes to increase government purchases and at the same time decrease personal income taxes, they

If an economy were experiencing a high rate of unemployment as the result of weak aggregate demand, a Keynesian economist would be most likely to recommend

According to the Keynesian view, an unanticipated reduction in spending will

Within the Keynesian model, if the marginal propensity to consume is 0.8, which of the following is true?

Within the Keynesian model, if the output of an economy is less than the full-employment level, then

When the federal government is running a budget deficit,

The marginal propensity to consume (MPC) is

Use the figure below to answer the following question(s). Figure 11-2 Refer to Figure 11-2. When the economy is operating at point a, reliance on the self-correcting mechanism will

According to the Keynesian view, which of the following would most likely stimulate real output if an economy were in a recession?

The Keynesian model provided an explanation for

The optimal time for the implementation of restrictive fiscal policy would be

The expenditure multiplier indicates that

Which of the following is a problem with discretionary fiscal policy as an economic stabilization tool?

The Great Depression provided support for Keynes' view that

As the marginal propensity to consume (MPC) decreases, the spending multiplier

The marginal propensity to consume is defined as the

Keynes rejected the view that lower wages would direct a recessionary economy back to full employment because

Changes in government spending and/or taxes as the result of legislation, is called

Why does a tax change affect aggregate demand?