Exam 11: Classical and Keynesian Macro Analyses

In the original Austin Powers, Dr. Evil is cryogenically frozen for thirty years (from the late 1960s to the late 1990s). Upon his return he hatches a plan to extort one million dollars from various world governments. His henchmen are unimpressed. What type(s) of inflation have made Dr. Evil's proposed blackmail amount seem too small?

At higher rates of interest,

Which of the following can cause inflation?

What is the underlying assumption of the original, simplified Keynesian model?

Keynes argued that an economy could be in equilibrium when the economy was

Which one of the following is true?

-Refer to the above figure. Suppose the economy is at E. A stronger dollar leads to a lower real GDP. Which of the aggregate supply curves must be the relevant curve after the change in the value of the dollar?

In an economic downturn, sticky wages and prices reduce the economy's speed of adjustment because

According to classical economists,

According to the classical theory, an inward shift in aggregate demand would reduce

In the classical model, a rightward shift in the aggregate demand curve will, in the long run,

Why is persistent unemployment a possibility in the Keynesian model but NOT in the classical model?

The exchange rate last month was $1 = 1.15 euros. This month it is $1 = 1.35 euros. We can say that the value of the dollar

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

A classical model of the economy predicts

An increase in aggregate demand will tend to cause which of the following?

In the classical model, the interest rate will adjust to equate

According to classical theory, desired saving always equals investment due to changes in

Which of the following will shift the Keynesian short-run aggregate supply curve downward and to the right?

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