Exam 10: Keynesian Macroeconomics and Economic Instability: a Critique of the Self-Regulating Economy

On a TE-TP diagram consider a level of Real GDP at which the vertical distance to the TE line is less than the vertical distance to the 45-degree line.This level of Real GDP is __________ its equilibrium level,with __________.

Which of the following statements is false?

When there is economy-wide equilibrium,there is a tendency for

Economist Brown believes that changes in aggregate demand affect only the price level,and economist Black believes that changes in aggregate demand affect only Real GDP.What does the aggregate supply (AS)curve look like for each economist?

Exhibit 10-1 -Refer to Exhibit 10-1.At Q₃,

Exhibit 10-5 -Refer to Exhibit 10-5 above.The equilibrium level of Real GDP is

Autonomous consumption is

Exhibit 10-2 -Refer to Exhibit 10-2.Equilibrium Real GDP occurs at

Total production

Which statement is consistent with what Keynes believed about consumption and disposable income?

Keynes believed that

John Maynard Keynes drew many economists ______________ the classical view.The classical view held that a market economy __________ regulate itself to avoid long periods of excessive unemployment.

If total production (TP)is less than total expenditures (TE),it follows that

Suppose the multiplier is 4.ceteris paribus,a change in autonomous spending will change total spending more if the aggregate supply curve is __________ than if it is __________.

Classical economists used efficiency wage models to support their belief in a self-regulating economy.

The economy is in equilibrium,TP = TE,and Real GDP is $4,000 billion.The MPC is 0.60,the multiplier is operative,and idle resources exist at each expenditure round.Autonomous investment spending rises by $13 billion.As a result,the __________ curve shifts __________,inventory levels unexpectedly __________,business firms __________ the quantity of goods and services they produce,and Real GDP __________ by __________.

Here is a consumption function: C = C₀ + MPC(Y_d).If C₀ = $200,then we know that

Keynes argued that

In the TE-TP framework,total production

Which of the following is consistent with the classical view of Say's law?