Exam 11: Classical and Keynesian Macro Analyses

-The above figure presents the view of the economy according to

The inflation associated with the oil price shocks in the 1970s after OPEC restricted the supply of oil is an example of

One key assumption of the classical model is

According to the classical theory, the aggregate supply curve is

In the classical model, desired saving

Say's law states that

Which of the following is NOT a key assumption of the classical model?

When the value of the dollar increases, the net effect on the economy

Q: How many economists does it take to screw in a light bulb? A: None. If the light bulb really needed changing, market forces would have already caused it to happen. This joke represents the view of

Which of the following statements about the classical model of the economy is FALSE?

-Consider the above figure. If the aggregate demand went from AD₂ to AD₃, our nation would have gone from

Along a short-run aggregate supply curve, which of the following is (are) held constant?

If the U.S. dollar becomes weaker in international markets, the net effects will include

The gap that exists when equilibrium real GDP is greater than the level of real GDP shown by the position of the long-run aggregate supply curve is

In the classical model, a change in aggregate demand

To explain the existence of excess capacity, Keynes argued that

The short-run and long-run aggregate supply curves remain stable, and a decrease in aggregate demand occurs. What is the result in the short run?

Classical economists wrote from the 1770s to the ________.

According to Keynes, involuntary unemployment is possible because of

Which of the following statements is NOT true about Say's law?