Question 1

Many economists argue that the labor market may take a long time for wages to adjust to new equilibrium level.

Accepted Answer

A) True 
 B)False

Question 2

Autonomous consumption is

Accepted Answer

A)   the change in consumption that results as a person's (or nation's)  income increases or decreases.
B)   that portion of total consumption that is dependent upon the level of income.
C)   the steady increase in the consumption of goods and services that automatically occurs as a person grows from a child to an adult.
D)   that portion of total consumption that is independent of the level of income.E) None of the above
F) All of the above

Question 3

Exhibit 10-9
 
-Refer to Exhibit 10-9.What is the value of the marginal propensity to consume (MPC) that would correctly fill in blank (G) and the value of the multiplier that would correctly fill in blank (H) ?

Accepted Answer

A)   0.80; 20
B)   0.80; 5
C)   0.20; 0.80
D)   0.50; 0.50
E)   There is not enough information given to answer this question.F) C) and D)
G) B) and D)

Question 4

Keynes asserted that investment is more responsive to business expectations,technological changes and innovation,than to changes in interest rates.

Accepted Answer

A) True 
 B)False

Question 5

Exhibit 10-9
 
-Refer to Exhibit 10-9.What is the value of the marginal propensity to save (MPS) that would correctly fill in blank (A) and the multiplier that would correctly fill in blank (B) ?

Accepted Answer

A)   0.20; 5
B)   0.08; 8
C)   0.08; 12.5
D)   0.05; 0.95E) All of the above
F) B) and D)

Question 6

Which statement is consistent with what Keynes believed about consumption and disposable income?

Accepted Answer

A)   Consumption depends upon disposable income and falls as disposable income rises.
B)   Consumption rises by the same amount as disposable income rises.
C)   Consumption rises by less than disposable income rises.
D)   Disposable income depends upon consumption.E) A) and C)
F) All of the above

Question 7

Exhibit 10-1
 1. B)  Q2. C)  Q3. D)  Q1 and Q3. E)  none of the above" class="answers-bank-image d-inline" rel="preload" >
-Refer to Exhibit 10-1.Equilibrium Real GDP occurs at

Accepted Answer

A)   Q1.
B)   Q2.
C)   Q3.
D)   Q1 and Q3.
E)   none of the aboveF) A) and B)
G) A) and C)

Question 8

The horizontal investment curve used to derive the TE curve means investment is

Accepted Answer

A)   directly related to Real GDP.
B)   indirectly related to Real GDP.
C)   independent of Real GDP.
D)   sometimes directly and sometimes indirectly related to Real GDP, depending upon whether it is planned capital or planned inventory investment.E) None of the above
F) A) and D)

Question 9

In the simple Keynesian model,there are three simplifying assumptions. Among these assumptions is:

Accepted Answer

A)   the price level is flexible
B)   no foreign sector
C)   the price level is constant until the economy reaches its full-employment level
D)   the money supply always rises
E)   b and cF) A) and D)
G) A) and C)

Question 10

If autonomous consumption rises,the TE curve shifts __________,the marginal propensity to consume __________,and the TP curve __________.

Accepted Answer

A)   upward; rises; shifts downward
B)   upward; remains unchanged; remains unchanged
C)   downward; rises; remains unchanged
D)   upward; remains unchanged; shifts downward
E)   none of the aboveF) B) and E)
G) A) and E)

Question 11

How does the classical position on saving differ from Keynes's position?

Accepted Answer

A)   Classical position: people save more at lower interest rates. Keynes's position: people save less at lower interest rates.
B)   Classical position: changes in the interest rate are irrelevant to saving decisions. Keynes's position: saving is directly related to the interest rate.
C)   Classical position: saving is directly related to the interest rate. Keynes's position: at times, saving may be inversely related to the interest rate.
D)   Classical position: saving can be inversely related to the interest rate. Keynes's position: consumption rises as saving rises.
E)   none of the aboveF) A) and D)
G) All of the above

Question 12

The more firms that pay efficiency wages,the

Accepted Answer

A)   more likely the economy will get stuck in a recessionary gap.
B)   less likely the economy will get stuck in a recessionary gap.
C)   more likely the economy will get stuck in an inflationary gap.
D)   more likely (over time)  the economy will produce Natural Real GDP.
E)   b and cF) A) and D)
G) A) and E)

Question 13

For Say's law to hold in a money economy,

Accepted Answer

A)   funds invested must give rise to an equal amount of funds spent.
B)   funds saved must give rise to an equal amount of funds invested.
C)   funds spent must give rise to an equal amount of output produced.
D)   interest rates must fall when saving decreases.
E)   b and cF) A) and D)
G) B) and E)

Question 14

John Maynard Keynes was the son of

Accepted Answer

A)   one of the first female students to attend Cambridge University.
B)   Russian ballerina Lydia Lopokova.
C)   the mayor of London.
D)   an eminent economist.
E)   a and dF) All of the above
G) A) and B)

Question 15

Keynes believed that investment is

Accepted Answer

A)   dependent on a number of factors, including business expectations.
B)   mainly determined by changes in interest rates.
C)   unrelated to business expectations.
D)   related to business expectations only during recessionary periods.E) A) and B)
F) B) and C)

Question 16

Exhibit 10-3
 
-Refer to Exhibit 10-3.When disposable income equals $2,000,saving equals

Accepted Answer

A)   -$20.
B)   -$40.
C)   0.
D)   $40.
E)   $20.F) C) and D)
G) D) and E)

Question 17

Which of the following is true?

Accepted Answer

A)   If MPC = 0.50, then the multiplier is 2.00.
B)   If MPC = 0.82, then the multiplier is 1.25.
C)   If MPS = 0.35, then the multiplier is 2.86.
D)   If MPC = 0.97, then the multiplier is 3.33.
E)   a and cF) A) and E)
G) D) and E)

Question 18

The classical economists believed __________ determined savings,while Keynes said it was __________.

Accepted Answer

A)   interest rates; income
B)   income; investment
C)   investment; interest rates
D)   interest rates; investmentE) C) and D)
F) A) and C)

Question 19

The answer is: "It is sometimes in the best interest of business firms to pay their employees higher-than-equilibrium wage rates." What is the question?

Accepted Answer

A)   What do efficiency wage models imply?
B)   What do classical economists say?
C)   What is the central tenet of Say's law?
D)   What did John Maynard Keynes say was the reason for inflexible wages?
E)   none of the aboveF) C) and E)
G) None of the above

Question 20

Exhibit 10-8
 
-Refer to Exhibit 10-8.The marginal propensity to save (MPS) is

Accepted Answer

A)   0.90.
B)   0.10.
C)   0.75.
D)   0.25.
E)   4.00.F) A) and D)
G) B) and C)

Exam 10: Keynesian Macroeconomics and Economic Instability: A Critique of the Self-Regulating Economy

The answer is: "It is sometimes in the best interest of business firms to pay their employees higher-than-equilibrium wage rates." What is the question?

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The more firms that pay efficiency wages,the

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Exhibit 10-1 -Refer to Exhibit 10-1.Equilibrium Real GDP occurs at

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Which statement is consistent with what Keynes believed about consumption and disposable income?

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Exhibit 10-3 -Refer to Exhibit 10-3.When disposable income equals $2,000,saving equals

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Keynes asserted that investment is more responsive to business expectations,technological changes and innovation,than to changes in interest rates.

Correct AnswerverifiedShow Answer

Which of the following is true?

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If autonomous consumption rises,the TE curve shifts __________,the marginal propensity to consume __________,and the TP curve __________.

Correct AnswerverifiedShow Answer

In the simple Keynesian model,there are three simplifying assumptions. Among these assumptions is:

Correct AnswerverifiedShow Answer

Autonomous consumption is

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John Maynard Keynes was the son of

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Keynes believed that investment is

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The classical economists believed __________ determined savings,while Keynes said it was __________.

Correct AnswerverifiedShow Answer

Many economists argue that the labor market may take a long time for wages to adjust to new equilibrium level.

Correct AnswerverifiedShow Answer

The horizontal investment curve used to derive the TE curve means investment is

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Exhibit 10-9 -Refer to Exhibit 10-9.What is the value of the marginal propensity to consume (MPC) that would correctly fill in blank (G) and the value of the multiplier that would correctly fill in blank (H) ?

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How does the classical position on saving differ from Keynes's position?

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For Say's law to hold in a money economy,

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Exhibit 10-8 -Refer to Exhibit 10-8.The marginal propensity to save (MPS) is

Correct AnswerverifiedShow Answer

Exhibit 10-9 -Refer to Exhibit 10-9.What is the value of the marginal propensity to save (MPS) that would correctly fill in blank (A) and the multiplier that would correctly fill in blank (B) ?

Correct AnswerverifiedShow Answer

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If autonomous consumption rises,the TE curve shifts ,the marginal propensity to consume ,and the TP curve __.

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The classical economists believed determined savings,while Keynes said it was .

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