Question 1

Keynesian business cycle theory cannot account for the procyclical behaviour of

Accepted Answer

A) employment,money,inflation,and labour productivity with the labour hoarding assumption. 
B) unemployment,money,inflation,and labour productivity with the labour hoarding assumption. 
C) employment,money,real interest rates,and real wages with sticky wages. 
D) unemployment,money,inflation,and real wages. 
A) employment,money,inflation,and labour productivity with the labour hoarding assumption. 
B) unemployment,money,inflation,and labour productivity with the labour hoarding assumption. 
C) employment,money,real interest rates,and real wages with sticky wages. 
D) unemployment,money,inflation,and real wages.

Question 2

According to the Classical model,an anticipated fiscal policy

Accepted Answer

A) cannot affect output and employment. 
B) can affect output and employment in the short run. 
C) can effect output and employment in the long run. 
D) changes labour supply and therefore full-employment level of output. 
A) cannot affect output and employment. 
B) can affect output and employment in the short run. 
C) can effect output and employment in the long run. 
D) changes labour supply and therefore full-employment level of output.

Question 3

The short run aggregate supply curve is

Accepted Answer

A) positively sloped in both Keynesian and the classical models. 
B) positively sloped in the Keynesian model,but horizontal in the classical model. 
C) positively sloped in the classical model,but horizontal in the Keynesian model. 
D) horizontal in both Keynesian and the classical models. 
A) positively sloped in both Keynesian and the classical models. 
B) positively sloped in the Keynesian model,but horizontal in the classical model. 
C) positively sloped in the classical model,but horizontal in the Keynesian model. 
D) horizontal in both Keynesian and the classical models.

Question 4

In the Keynesian model in the short run,a decrease in government purchases causes output to ________ and the real interest rate to ________.

Accepted Answer

A) fall;rise 
B) fall;fall 
C) rise;rise 
D) rise;fall 
A) fall;rise 
B) fall;fall 
C) rise;rise 
D) rise;fall

Question 5

An anticipated fiscal policy in the form of a tax hike

Accepted Answer

A) increases labour supply and full-employment level of output in the Classical model. 
B) increases full-employment level of output through higher aggregate demand in the Keynesian model. 
C) increases leisure and decreases labour supply and output in the Classical model. 
D) has the same effect in the Keynesian and Classical models. 
A) increases labour supply and full-employment level of output in the Classical model. 
B) increases full-employment level of output through higher aggregate demand in the Keynesian model. 
C) increases leisure and decreases labour supply and output in the Classical model. 
D) has the same effect in the Keynesian and Classical models.

Question 6

According to Keynesians,the primary reason money is NOT neutral is

Accepted Answer

A) rational expectations. 
B) price stickiness. 
C) reverse causation. 
D) misperceptions over the aggregate price level. 
A) rational expectations. 
B) price stickiness. 
C) reverse causation. 
D) misperceptions over the aggregate price level.

Question 7

The main difference between classical economists and the Keynesians in explaining the SRAS curve is that

Accepted Answer

A) classicals argue that prices are rigid,but Keynesians argue that wages are rigid. 
B) classicals argue that wages are rigid,but Keynesians argue that prices are rigid. 
C) classicals argue that output changes with price changes as long as there is misperception about relative price levels,but Keynesians argue that the SRAS curve is positively sloped for the term of the labour contracts. 
D) classicals argue that the SRAS curve is positively sloped because of rational expectations,but Keynesians argue that it is because of the failure of rational expectations. 
A) classicals argue that prices are rigid,but Keynesians argue that wages are rigid. 
B) classicals argue that wages are rigid,but Keynesians argue that prices are rigid. 
C) classicals argue that output changes with price changes as long as there is misperception about relative price levels,but Keynesians argue that the SRAS curve is positively sloped for the term of the labour contracts. 
D) classicals argue that the SRAS curve is positively sloped because of rational expectations,but Keynesians argue that it is because of the failure of rational expectations.

Question 8

The crowding-out effect refers to a situation where

Accepted Answer

A) an easy fiscal policy reduces interest rate and increases investment. 
B) an easy monetary policy reduces interest rate and increases investment. 
C) an easy fiscal policy increases interest rate and decreases investment. 
D) an easy monetary policy increases interest rate and decreases investment. 
A) an easy fiscal policy reduces interest rate and increases investment. 
B) an easy monetary policy reduces interest rate and increases investment. 
C) an easy fiscal policy increases interest rate and decreases investment. 
D) an easy monetary policy increases interest rate and decreases investment.

Question 9

The Keynesian theory is consistent with the business cycle fact that inflation is

Accepted Answer

A) procyclical and leading. 
B) procyclical and lagging. 
C) countercyclical and leading. 
D) countercyclical and lagging. 
A) procyclical and leading. 
B) procyclical and lagging. 
C) countercyclical and leading. 
D) countercyclical and lagging.

Question 10

Keynesian models rely on the sticky-wage assumption.Explain the rationale for this assumption.

Accepted Answer

Wage contracts typically last for years,

Question 11

If the menu cost theory is true,then firms that change prices less frequently than other firms are likely to be in

Accepted Answer

A) more competitive industries. 
B) service,rather than manufacturing,industries. 
C) growing,rather than declining,industries. 
D) less competitive industries. 
A) more competitive industries. 
B) service,rather than manufacturing,industries. 
C) growing,rather than declining,industries. 
D) less competitive industries.

Keynesian business cycle theory cannot account for the procyclical behaviour of

According to the Classical model,an anticipated fiscal policy

The short run aggregate supply curve is

In the Keynesian model in the short run,a decrease in government purchases causes output to and the real interest rate to .

An anticipated fiscal policy in the form of a tax hike

According to Keynesians,the primary reason money is NOT neutral is

The main difference between classical economists and the Keynesians in explaining the SRAS curve is that

The crowding-out effect refers to a situation where

The Keynesian theory is consistent with the business cycle fact that inflation is

Keynesian models rely on the sticky-wage assumption.Explain the rationale for this assumption.

If the menu cost theory is true,then firms that change prices less frequently than other firms are likely to be in

Introduction to Macroeconomics

The Measurement and Structure of the Canadian Economy

Productivity, output, and Employment

Consumption, saving, and Investment

Saving and Investment in the Open Economy

Long-Run Economic Growth

The Asset Market, money, and Prices

Business Cycles

The Is-Lm-Fe Model: a General Framework for Macroeconomic Analysis

Exchange Rates, business Cycles, and Macroeconomic Policy

Classical Business Cycle Analysis: Market-Clearing Macroeconomics

Unemployment and Inflation

Monetary Policy and the Bank of Canada

Government Spending and Its Financing

Filters

Exam 12: Keynesian Business Cycle Analysis: Non Market Clearing Macroeconomics

Keynesian business cycle theory cannot account for the procyclical behaviour of

According to the Classical model,an anticipated fiscal policy

The short run aggregate supply curve is

In the Keynesian model in the short run,a decrease in government purchases causes output to ________ and the real interest rate to ________.

An anticipated fiscal policy in the form of a tax hike

According to Keynesians,the primary reason money is NOT neutral is

The main difference between classical economists and the Keynesians in explaining the SRAS curve is that

The crowding-out effect refers to a situation where

The Keynesian theory is consistent with the business cycle fact that inflation is

Keynesian models rely on the sticky-wage assumption.Explain the rationale for this assumption.

If the menu cost theory is true,then firms that change prices less frequently than other firms are likely to be in

Introduction to Macroeconomics

The Measurement and Structure of the Canadian Economy

Productivity, output, and Employment

Consumption, saving, and Investment

Saving and Investment in the Open Economy

Long-Run Economic Growth

The Asset Market, money, and Prices

Business Cycles

The Is-Lm-Fe Model: a General Framework for Macroeconomic Analysis

Exchange Rates, business Cycles, and Macroeconomic Policy

Classical Business Cycle Analysis: Market-Clearing Macroeconomics

Unemployment and Inflation

Monetary Policy and the Bank of Canada

Government Spending and Its Financing

Filters

In the Keynesian model in the short run,a decrease in government purchases causes output to and the real interest rate to .