Exam 11: Classical and Keynesian Macro Analyses

Keynesian economists argue that

The classical model uses the assumption that

-Refer to the above figure. At the initial long-run equilibrium, the price level is ________, and at the new long-run equilibrium, the price level will be ________.

A temporary embargo on oil from the Middle East going in to the United States would

Suppose the current situation is such that the price level is 120, real GDP is $14 trillion, and long-run aggregate supply is $13.6 trillion. We can conclude that

A short-lived increase in oil prices caused by destruction of oil-producing and oil-refining facilities by a large hurricane will

According to the classical model, prices and wages

According to classical economists, a decrease in the rate of interest will

Long-run unemployment in the classical model is considered to be impossible because

If you feel you are better off because you receive a 20 percent raise even when the price level also increases by 20 percent, then you are a victim of the

Demand-pull inflation is caused by

Full employment in the classical model is maintained by

-Refer to the above figure. Suppose the economy had been at point A and now is at B. What could have caused the movement to B?

"Supply creates its own demand" is known as

The Keynesian short-run aggregate supply curve is horizontal because

Q: How many economists does it take to change a light bulb? A: All. Because then you will generate employment, more consumption, moving the aggregate demand curve to the right. This joke represents the view of

Joe's increase in wages has been identical to the increase in the price level. Joe thinks that he is better off and has increased his expenditures. Joe's behavior is consistent with

Keynesian economists would likely argue that the classical model is which of the following?

In the short run, real GDP can increase beyond a level consistent with the long-run growth path if

The original Keynesian economic theory states that