Exam 25: Macroeconomic Viewpoints: New Keynesian, Monetarist, and New Classical

The primary difference between new Keynesian economics and traditional Keynesian economics is that the former is more realistic about international trade, whereas the latter stresses the importance of inward oriented strategies.

Monetarists believe that:

Which of the following economic theories became popular in the 1930s in response to the shortcomings of existing theories of the Great Depression?

_____ have faith in the free market (price)system that leads them to favor minimal government intervention.

Which of the following macroeconomic schools of thought had dominated the economics profession from the 1940s through the 1960s?

The figure given below shows the supply curves with different slopes. Figure 15.1 Refer to Figure 15.1.Which of the following supply curves represents the supply curve described by the modern Keynesians?

Which of the following school of thought believes that the major source of the macroeconomic problems are the disequilibria in the private labor and goods market?

An economist from which school of thought would most likely accept the following- "The wide acceptance and practice of activist government fiscal policy."

According to new Keynesian economics:

Monetarists believe that changes in monetary policy would have:

Monetarists believe that in the short run:

New classical economists contend that an unexpected increase in the money supply will:

In case of classical model, increase in aggregate expenditure would:

An economist from which school of thought would be most likely to say the following- "An increase in government expenditure will only increase inflation, because the aggregate supply curve is vertical."

A by-product of the acceptance of the Keynesian school was the wide approval and practice of activist fiscal policy around the world.

Which of the following schools of thought emphasize the role of money supply in determining equilibrium real GDP and price level?

Monetaristsargue that the long-run Phillips curve is negatively sloped.

Reaction lag is the term used to express the fact that some time passes before changes in the money supply are properly translated into changes in real GDP.

According to new classical school of economics, the aggregate supply curve is:

The main reason why the traditional classical school ceased to be widely accepted was that: