Keynesian Aggregate Expenditures3

Keynesian Aggregate Expenditures3 - Chapter 9 / 25...

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Chapter 9 / 25 Classical Macroeconomics and Keynesian Aggregate Expenditures 1) CM25 \ A \\ Classical Macroeconomics \ 1 \\ The conventional wisdom of macroeconomic theory that developed from the late eighteenth century until the Great Depression is called: (a) classical or neoclassical macroeconomics. (b) Keynesian macroeconomics. (c) the theory of efficient markets. (d) supply side theory. 2) CM25 \ C \\ Classical Macroeconomics: Laissez Faire \ 1 \\ Most economists prior to the 1930s believed that: (a) government policies were necessary to assure full employment. (b) the real world value of the government multiplier was about 2. (c) if left alone, the economy would self-correct. (d) demand created its own supply. 3) CM25 \ A \\ Classical Macroeconomics: Wage-Price Flexibility \ 1 \\ Flexible wages and prices are an essential part of: (a) classical macroeconomics. (b) Keynesian macroeconomics. (c) Marxian macroeconomics. (d) post-Keynesian economics. 4) CM25 \ E \\ Classical Macroeconomics: Wage-Price Flexibility \ 2 \\ Classical economists would perceive widespread surpluses of goods as curable by: (a) ceilings on interest rates. (b) collective bargaining by labor unions. (c) central planning. (d) efficiency wage contracts. (e) price cuts. Ralph Byrns Chapter 9 / 25: Classical Macroeconomics and Keynesian Aggregate Expenditures Test Bank Three 1
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5) CM25 \ D \\ Say’s Law \ 1 \\ Say’s law is a cornerstone for: (a) Marxist macroeconomics. (b) Keynesian economics. (c) unintended consequences. (d) classical macroeconomics. (e) market inefficiency. 6) CM25 \ A \\ Say’s Law \ 2 \\ Prior to the 1936 publication of The General Theory by John Maynard Keynes, most mainstream economists believed that: (a) supply creates its own demand. (b) inflation was self-eliminating but unemployment was not. (c) stagflation could be generated by excess Aggregate Demand. (d) Aggregate Supply was horizontal at income less than potential GDP. Figure C2507 7) CM25\ B \C2507\Classical Theory: Labor Markets\3\\ Suppose D 0 and S 0 are the initial demand and supply for labor. Classical theory suggests that employers cannot exploit these workers by paying wage W 0 because: (a) the workers would join a union, and this would drive wages up to W 2 . (b) any wage less than W 1 generates shortages of workers, forcing firms to compete for workers by bidding up the wage rate until it rises to W 1 . (c) only L 2 unskilled workers are available at wage W 0 . (d) surplus workers between L 3 and L 1 will be competing for these jobs. © 2006 Economics Interactive .com Contemporary Economics 2
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8) CM25\ C \C2507\Classical Theory: Labor Markets\3\\ Suppose a period of prosperity generated equilibrium at point e , and then a recession reduced the demand for labor to D 0 . Classical economic theory would conclude that: (a) of the L 3 workers originally employed in this market, about L 0 will be involuntarily unemployed for the duration of the recession. (b) L
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This note was uploaded on 02/07/2011 for the course ECON 3461 taught by Professor Spencer during the Spring '10 term at Golden West College.

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Keynesian Aggregate Expenditures3 - Chapter 9 / 25...

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