Exam 10: Classical and Keynesian Macro Analyses

To explain the existence of excess capacity, Keynes argued that

Why is there NO persistent unemployment in the classical model?

An unexpected event that causes the aggregate demand curve to shift inward or outward is an

In the classical model,

-Which point or points on the above figure illustrate a short-run equilibrium?

Money illusion is

Suppose the euro appreciates against the dollar. This causes U.S. exports to become less expensive for consumers in the European Union, which would likely cause the U.S.

In the classical model, the aggregate supply curve

In the classical model

Suppose the economy in the diagram below is in long-run equilibrium. If government spending decreases and causes a movement from point A to point B in the diagram below, what are the short-run effects? Explain fully.

The simplified Keynesian model

Suppose that last year $1 U.S. exchanged for 1.2 euros. If this year $1 exchanges for 1.3 euros, then we can conclude that

If you feel you are better off because you receive a 10 percent raise even when the price level also increases by 10 percent, then you are a victim of the

The concept of Say's law can be summed up by the phrase,

The original Keynesian economic theory states that

-Identify the 3 curves in the above figure.

There is a distinction between the long-run aggregate supply (LRAS)curve and the short-run aggregate supply (SRAS)curve. In the long run

A key assumption in the classical model is

One possible result of a fall in aggregate demand coupled with a stable short-run aggregate supply is

If the equilibrium level of real GDP per year is greater than the full-employment level of GDP, then