Exam 11: Classical and Keynesian Macro Analyses

According to Say's law

A new discovery of large volumes of previously unknown oil deposits in Texas would

In the classical model, changes in interest rates will always ensure that

The short-run aggregate supply curve would shift and the long-run aggregate supply curve would remain fixed if

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

One effect of a stronger dollar is

An inflationary gap is the amount by which

Classical economists argued that

A recessionary gap results when

The gap that exists when equilibrium real GDP is less than full-employment real GDP is

Which one of the following statements is TRUE?

Cost-push inflation occurs

The short-run aggregate supply curve in modern Keynesian analysis is

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

Which of the following will cause an increase in aggregate supply?

Refer to the above figure. Suppose we are at E* and the dollar weakens. Which aggregate supply curve must apply if the price level increases?

Keynes argued that because of sticky prices and wages

If there is a change in the U.S. endowment of factors of production, then there would be

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

The concept of Say's law can be summed up by the phrase,