Macroeconomic Equilibrium2

Macroeconomic Equilibrium2 - Chapter 26 10 Macroeconomic...

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Chapter 26 / 10 Macroeconomic Equilibrium 1) CM26 \ C \\ Classical Equilibrium: The Long Run \ 2 \\ According to classical macroeconomic theory, full employment is ensured in the long run because: (a) aggregate output adjusts to shifts in Aggregate Demand. (b) demand creates its own supply. (c) prices, wages, and interest rates are flexible. (d) rich capitalists will consume conspicuously. (e) planned investment depends on volatile saving. 2) CM26 \ B \\ History: Recessions and Depressions \ 2 \\ Keynesians argue that, before the 1970s, most major recessions were caused by: (a) excessive government deficits. (b) declines in Aggregate Demand. (c) stagflation. (d) increasing rates of voluntary unemployment. 3) CM26 \ C \\ History: John Maynard Keynes \ 1 \\ John Maynard Keynes's " The General Theory of Employment, Interest, and Money " was published in: (a) 1776. (b) 1819. (c) 1936. (d) 1970. 4) CM26 \ A \\ Keynesian Theory: Recessions \ 2 \\ Keynesian macroeconomic analysis primarily focuses on problems associated with achieving: (a) full employment when economies are depressed. (b) higher tax rates to balance federal budgets. (c) mild inflation to reduce voluntary unemployment. (d) growth of Aggregate Supply to cure inflation. (e) excess capacity so that everyone has a job. Ralph Byrns Chapter 26 / 10 : Macroeconomic Equilibrium Test Bank Three 1
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5) CM26 \ A \\ Classical and Keynesian Theories: Long Run vs. Short Run \ 2 \\ The famous quip that “… in the long run we are all dead … ” was intended as a criticism of: (a) classical macroeconomics for failing to consider such policy issues as recessions or unemployment that may be critical in the short run. (b) Keynesian theory for failing to address how the money supply affects the rate of inflation. (c) classical theory for failing to identify how society can achieve a fair distribution of income. (d) Keynesian theory for ignoring how government spending reduces market efficiency. 6) CM26 \ D \\ Aggregate Demand \ 2 \\ Keynesian economic theory stresses that in a depression: (a) capitalism conforms to Marxist predictions. (b) laissez-faire policies are only short-run solutions. (c) automatic adjustments yield full employment. (d) demand creates its own supply. 7) CM26 \ A \\ Aggregate Demand and Expectations \ 3 \\ If households and firms expect aggregate output to fall during a recession in the near future, this may: (a) reduce autonomous spending. (b) increase autonomous consumption. (c) reduce autonomous saving. (d) trigger inflation. 8) CM26 \ A \\ Aggregate Demand and Aggregate Supply \ 2 \\ If Aggregate Supply is perfectly flat, changes in Aggregate Demand will change: (a) aggregate output, but not the price level. (b) the price level, but not aggregate output.
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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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Macroeconomic Equilibrium2 - Chapter 26 10 Macroeconomic...

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