Exam 17: Macroeconomics: Events and Ideas

The macroeconomic theory stating that because workers and firms take all information into account,only unexpected changes in the money supply affect aggregate output is called _____ theory.

According to classical economists,the aggregate supply curve is _____,but according to Keynes,it is _____.

Using increased government spending and tax cuts to fight a recession is consistent with _____ economics.

Macroeconomic policy activism:

Classical macroeconomists focused on the long-run effects of monetary policy on the aggregate price level and argued that it had no short-run or long-run effects on aggregate output.

According to Keynes,changes in "animal spirits" will affect actual output through changes in:

Use the following to answer questions: -(Figure: Classical versus Keynesian Macroeconomics)Refer to Figure: Classical versus Keynesian Macroeconomics.According to the Keynesian view,if this economy shifts from AD₁ to AD₂ because of a large decline in investment spending by businesses,the price level will _____,and real GDP will _____.

If wages and prices are perfectly flexible,a decrease in aggregate demand will cause a(n)_____ in the price level and _____ in unemployment.

In the classical model,an increase in the money supply will result in:

The political business cycle does NOT imply that:

Most economists now agree that:

The belief that government spending will crowd out private spending is part of:

A policy implication of monetarism is that:

When the central bank pursues a policy of quantitative easing,it:

The Great Moderation consensus is that expansionary monetary policy affects only prices,not output.

The Great Moderation consensus was shattered by:

The political business cycle is MOST often found when:

The period of relative calm in the economy between 1992 and 2007 is called the Great Moderation.

Which statement is broadly agreed upon by modern macroeconomists?

Which school of thought believes that fiscal policy should have the central role in fighting recessions? I.classical macroeconomics II.Keynesian macroeconomics III.monetarism