Exam 11: Classical and Keynesian Macro Analyses

Suppose we observe rising nominal GDP, a rising price level, and constant unemployment as a result of an increase in aggregate demand. We would conclude that the aggregate supply curve is

-Refer to the above figure. The classical aggregate supply curve is represented by ________ and the Keynesian short-run aggregate supply curve is represented by ________.

Oil prices increased significantly in 2008. According to the Keynesian model, this increase in oil prices should have caused which of the following to occur?

Keynesian economics predicts that if government policy makers deem current equilibrium real Gross Domestic Product (GDP) to be "too low," then an appropriate policy action would be to

In the classical model, changes in interest rates will always ensure that

The approach to understanding the determination of real GDP and the price level that emphasizes incomplete adjustment in the prices of many goods is

The Keynesian portion of the short-run aggregate supply (SRAS) curve implies

According to the Keynesian model, the short-run aggregate supply (SRAS) curve is horizontal when

If the price level kept increasing, the short-run aggregate supply (SRAS) curve would get steeper because

The Keynesian short-run aggregate supply (SRAS) curve is

Which of the following is NOT true according to Say's law?

Demand-pull inflation occurs

Long-run aggregate supply curve in the classical model

A new discovery of large volumes of previously unknown deposits of natural gas in Pennsylvania would

All the following are assumptions of the classical model EXCEPT

Which of the following will cause an increase in aggregate supply?

Classical economists tend to

Which of the following is NOT an assumption of the classical model?

Cost-push inflation can be shown on an aggregate supply aggregate demand diagram as

If a shift in aggregate demand only affects real Gross Domestic Product (GDP), then the short-run aggregate supply (SRAS) curve must be