Exam 11: Classical and Keynesian Macro Analyses

Keynes argued that an economy could be in equilibrium when the economy was

Inflation caused by continually decreasing short-run aggregate supply is

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

Q: How many economists does it take to change a light bulb? A: All.Because then you will generate employment,more consumption,moving the aggregate demand curve to the right. This joke represents the view of

Saving is not a problem in the classical model because

In the classical model,desired saving

If the U.S.dollar becomes weaker in international foreign exchange markets,imported goods become more expensive.One result of this is that

An example of an aggregate supply shock is

According to Say's law,

-Refer to the above figure.Which of the graphs is consistent with the long-run aggregate supply curve?

As real GDP per year increases along the short-run aggregate supply (SRAS)curve,the SRAS curve

According to the classical theory,an inward shift in aggregate demand would reduce

-Refer to the above figure.Suppose the economy had been at point A and now is at B.What could have caused the movement to B?

Why did the classical economists think that large-scale unemployment was not possible in a market economy?

Say's law explains

"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?

According to modern Keynesian analysis,an increase in aggregate demand leads to a higher price level because the

"In the classical model,the equilibrium level of real Gross Domestic Product (GDP)is completely supply-determined." Do you agree or disagree? Why?

According to the circular flow of income and output,saving causes

An appreciation of the U.S.dollar ________ the price of U.S.imports,and ________ the price of U.S.exports.