Question 1

In the neoclassical view of the macroeconomy, if there is not enough investment spending to use all available savings

Accepted Answer

A)  the Federal Reserve will raise the interest rate. 
B)  the interest rate will fall. 
C)  excess savings will be hoarded. 
D)  excess savings will be used to pay taxes.

Question 2

Why are Neoclassical economists often called "equilibrium theorists"?

Accepted Answer

A)  Because they believe that government can easily restore the economy to equilibrium. 
B)  Because they believe the economy will always restore itself to equilibrium. 
C)  Because they believe the economy is always in equilibrium. 
D)  Because they believe all problems in the economy are caused by its equilibrium tendencies.

Question 3

Say's law was developed

Accepted Answer

A)  by John Maynard Keynes in 1926. 
B)  by Adam Smith in 1776. 
C)  by Jean Baptiste Say in 1800. 
D)  by Thomas Say in 1825.

Exam 2: The Classical View of the Macro-Economy

In the neoclassical view of the macroeconomy, if there is not enough investment spending to use all available savings

Why are Neoclassical economists often called "equilibrium theorists"?

Say's law was developed