Unformatted text preview: ‘ Us l0 C. 64.. Keynes was, of course. a ﬁne monetary economist. And in a “Kym” almost fully employed, so.
that had rising prices or other economic problems, monetary policy wound he his «commended polity. Bulletin
germ believes! in a reel deep depression, monotony policy would not \yorlt doe mainly to:
the llqnidity trap.
he fest Central Banks Would not have sufﬁcient reserves.
2. the feet that there on already long Identiﬁcation, pulley and hitplelnentsﬁon lugs.
d. the fact uslng monﬂry point would have unfortunate foreign exchange insplicntions.
e. All of the above. I " 55. mammals: onsompﬁon spending woe highly predietnhie. Past experience showed a “consumption function” could be
estlmnietl from post data. c. as consumers typically spent more than they turned, thereonsumptton was I touches: of the interest rates the
credlt compute: and banks charged. d. whatever the lent oldie GNP, consumption spending was I constant.
e. All of the shore. geommtien spending was highly wrinkle and count he considered so a nhdom'varlebte. 6h. Keynes, not unlike Egon. hall e psychological theory of the business cycle. Due twill: Say's Law would not
hold. He owned that: in a limp in consumer conﬁdence would lead to damaging shifts in the consumption function.
h. governments typically overshot in their Adjustments to choosing bushes; wodltionshecouse of panics
that spread in Parliaments or Conﬁrm
businessmen were subject to “changes In anhnsis spirits” that woultl lend to increases or decreases in
investment speodhtx. Such changes were critical inmate they led to either pressure on resources or to
d. All of the above. e. None of the above. 67. Become Keynes sew changes in " animal spirits” ts being highly important then:
he saw changes in government planning If the key vnrlahle In producing spending gzps and depressions.
@ sew investment spending as the key variable in producing spending gaps and dept-minim.
he sew export demon as the key wrinkle in prodnetng spending gaps end depressions. d. he saw consumption spending things as the Itey rut-hie in producing spending zips end depressions.
e. All of the shore. 68-. Keyw focused mainly on the assessment multiplier. thseqnent to Keyna economists lormsiiy worked out 1
number of other Iniﬂpllm. ﬁne multiplier whkh is gum counter-intuitive and which we oweto Two
Handemo show: that: n u balanced budget has no effect on an economy. This is known as the equiv-lean: theorem.
h. export spending has so inﬁnite multiplier. Fortunately this effect is offset by the import multiplier.
6 if a government increases spending and taxing in like mount. then the multiplier effect oftlnls is
one. So ﬂour government spent 59 billion on, say, ireq but taxed no 50 billion the silent on
aggregate spending would be In addition of 50 billion. Olin export maltipller has a value of one. This is one to the leakage that importspending creates.
e. None of the above. ...
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- Spring '09