Exam 10: Classical and Keynesian Macro Analyses

-Refer to the above figure. Suppose we are at E* and the dollar weakens. Which aggregate supply curve must apply if the price level increases?

-The reason that it is possible for the economy in the above figure to be at E₂ rather than at E₁ is that

The classical model indicates that at the equilibrium interest rate, saving is

A classical model of the economy predicts

A stronger U.S. dollar in world exchange markets means that

Using a graph, analyze the Great Depression from a Keynesian perspective. What happened to unemployment?

What is the major difference between the classical model and the Keynesian model? Explain.

The classical model assumes that

Say's law implies that

The aggregate supply curve in the classical model is

According to the above figure, what will the price level be in the new long-run equilibrium?

According to classical economists, the credit market reaches an equilibrium when

If the price level should increase in the near term due to decreases in the short-run aggregate supply, the result would be

Which of the following will NOT shift the short-run aggregate supply (SRAS)curve?

A stronger U.S. dollar leads to ________ in SRAS and ________ in AD simultaneously.

-Consider the above figure. If the aggregate demand curve rose from AD₁ to AD₃, our nation would be experiencing

"Supply creates its own demand" is known as

All of the following are assumptions of the classical model EXCEPT

In the classical model, the aggregate supply curve is

Suppose aggregate demand is increasing over time. Would the modern Keynesian model assume that the price level would always be constant? Explain.