Review questions - Keynesian economy

Review questions - Keynesian economy - Review questions...

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    Review questions
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    Which of the following policy options would  simultaneously increase interest rates and decrease  output? A. The Federal Reserve Board sells bonds through open market operations. B. The federal government increases its defense purchases. C. The Federal Reserve Board expands the money supply. D. The federal government increases the tax rate. E. Actions described in both A) and D).
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    If a decision maker is trying to make a best guess  for the future, his action is called A. Static expectation B. Dynamic expectation C. Adaptive expectation D. Rational expectation
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    The Keynesian assumptions of the  macroeconomy include each of the  following except A. Wages and prices are sticky or fixed B. The labor market is always in equilibrium with full employment C. Animal spirit partly explains investment decisions D. Inflationary gap is because of I>S
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    Okun's law depicts a relationship  between the A. Percentage change in real GDP and the change in the unemployment rate. B. Percentage change in nominal GDP and the change in the labor force. C. Absolute change in real GDP and the percentage change in the unemployment rate. D. Absolute change in real GDP and the percentage change in the GDP deflator.
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    Suppose the unemployment rate at the beginning of  the year is equal to 5 percent. According to Okun's  law, the following statement is FALSE: A. If the unemployment rate is unchanged during the year, real GDP tends to rise by 3 percent. B. If the average unemployment rate for the year rises to 7 percent, real GDP tends to fall by 1 percent in that year. C.
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This note was uploaded on 04/27/2009 for the course ECON 104 taught by Professor Shaffer during the Spring '08 term at Kansas.

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Review questions - Keynesian economy - Review questions...

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