CHAPTER 23 - Chapter 23 The Keynesian Framework and the...

Chapter 23
The Keynesian Framework and the ISLM Model
T Multiple Choice
1) His analysis started with the recognition that the total quantity demanded of an economy’s output
was the sum of four types of spending: consumer expenditure, planned investment spending,
government spending, and net exports.
(a) John Maynard Keynes
(b) Sir John Hicks
(c) Milton Friedman
(d) Paul A. Samuelson
Answer: A
Question Status: Previous Edition
2) Keynes’s motivation in developing the aggregate output determination model stemmed from his
concern with explaining
(a) the hyperinflations of the 1920s.
(b) why the Great Depression occurred.
(c) the high unemployment in Great Britain before World War I.
(d) the high unemployment in Great Britain after World War II.
Answer: B
Question Status: Previous Edition
3) Keynes was especially interested in explaining movements of _____ because he wanted to explain
why the Great Depression had occurred and how government policy could be used to increase _____
in a similar economic situation.
(a) aggregate output; wages
(b) aggregate output; employment
(c) wage rates; wages
(d) wage rates; employment
Answer: B
Question Status: Previous Edition
Chapter 23 The Keynesian Framework and the ISLM Model 823
4) Keynes was especially concerned with explaining the
(a) recession of 1920–21.
(b) low level of output and employment during the Great Depression.
(c) the strong economic growth of the 1920s.
(d) the high unemployment in Great Britain during the 1920s.
Answer: B
Question Status: Previous Edition
5) Keynes was especially concerned with explaining the ____ level of output and employment during
the _____.
6) In the simple Keynesian model, equilibrium aggregate output is determined by
7) Keynes argued that the sum of the components that comprise aggregate demand