Exam 11: Classical and Keynesian Macro Analyses

Say's law argues that I.overproduction is typical in a market economy. II.supply creates its own demand.

If a shift in aggregate demand only affects real Gross Domestic Product (GDP),then the short-run aggregate supply (SRAS)curve must be

Classical economists assumed that

According to classical theory,full employment in the labor market occurs

-Refer to the above figure.The classical aggregate supply curve is represented by ________ and the Keynesian short-run aggregate supply curve is represented by ________.

Say's law implies that

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

According to classical economists,a decrease in the rate of interest will

According to the classical economists,actual real GDP

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

The short-run aggregate supply curve is positively sloped because

The Keynesian short-run aggregate supply (SRAS)curve

A new discovery of large volumes of previously unknown deposits of natural gas in Pennsylvania would

Why is there NO persistent unemployment in the classical model?

An inflationary gap occurs when

-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?

The classical model makes little distinction between the long run and short run because

The discovery of new iron ore fields will cause

An economy in long-run equilibrium experiences an increase in aggregate demand.According to the classical model,