Exam 11: Classical and Keynesian Macro Analyses

Given the assumptions of the classical model,

-The three curves in the above figure are

One possible result of a fall in aggregate demand coupled with a stable short-run aggregate supply is

-Refer to the above figure. An increase in aggregate demand beyond real Gross Domestic Product (GDP) level Y₁ would result in

The short-run aggregate supply curve is positively sloped because

Which of the following statements is true about the long-run and short-run aggregate supply curve in the classical model?

Suppose the Federal Reserve increases the money supply. Which of the following will tend to occur as a result of this policy in a Keynesian model?

"The level of employment in an economy determines its real GDP, other things held constant." Do you agree or disagree? Why? What assumptions are necessary for your conclusion based on the classical model?

Classical economists argued that

-Refer to the above figure. Suppose the economy is at E originally, when the dollar increases in value. Which aggregate supply curve applies if the value of real GDP increases?

-In the above figure, the economy would most likely move from AD₁ to AD₂ because of

The significant increases in oil prices during the latter 2000s was an example of

According to classical economists, when aggregate demand decreases,

The Keynesian model is basically

-Refer to the above figure. Which point or points represent(s) a short-run equilibrium?

What shape did the short-run aggregate supply curve have during the 1930s, according to Keynes? Explain.

Real GDP is ________ determined in the classical model and ________ determined in the Keynesian model.

-Refer to the above figure. Suppose the current aggregate demand is represented by AD₂. If aggregate demand falls to line AD₃, then

-In the above figure, what could cause the shift of aggregate demand from to ?

In the classical model, what occurs if a wage of $20/hour results in unemployed workers?