Exam 11: Classical and Keynesian Macro Analyses

If a consumer buys less gasoline because gas prices increased by 10 percent, even though all other prices have also increased by 10 percent, then

A recessionary gap results when

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

A recessionary gap is the amount by which

Why is there NO persistent unemployment in the classical model?

In the Keynesian model, to understand the determination of income and employment it is necessary to understand

Keynesian economists argue that

The simple Keynesian model assumes that

In the short run, if aggregate demand shifts to the left while the position of the short-run aggregate supply curve does NOT change, then

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 consumer who buys more coffee when the price of coffee falls 5 percent, while all other prices fell 5 percent too, is

According to the classical model, investment

An individual who suffers from money illusion will

-Refer to the above figure. Which of the graphs is consistent with the Keynesian short-run aggregate supply curve?

Which statement best characterizes the classical economists' view of saving and investment?

For several years, the U.S. unemployment rate has been below the European unemployment rate. Offer a Keynesian explanation for this.

A permanent reduction in international trade barriers would

An assumption of the classical model is that

In the classical model, what is the result of an increase in aggregate demand?

The long-run aggregate supply curve is vertical at $10 trillion, but the short-run aggregate supply curve intersects the aggregate demand curve at $12 trillion. From this, we know that