# 55 - 8 In the Keynesian system with ﬂexible money wage...

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Unformatted text preview: 8. In the Keynesian system with ﬂexible money wage and imperfect information, the AS curve is ________. A. upward sloping, but flatter than in the Keynesian system with ﬁxed money wages. B. upward sloping, but steeper than in the Keynesian system with ﬁxed money wages. C. completely vertical. D. completely horizontal. 9. Suppose that money demand is given by the function below. What is the slope of the LM curve? i c . Md = 0.8Y — 107" f" \ x” A. —12.5 ~ {K‘s CL 3. 70.08.. C. 0.08 D. 12.5 10. In December of 2008, the Federal Reserve cut the Fed Funds rate, interest rate at which banks lend balances (federal funds) at the Federal Reserve to other banks overnight. According to a Keynesian this will cause the velocity of money to ________. According to a classical economist thiswill cause the velocity of money to “law". A. remain the same, increase B. remain the same, decrease I ‘ 3/ C. increase, remain the same l V/ D. decrease, remain the same 11. Below you are given two different investment functions. When investment is given by I, investment is _______ elastic with respect to the interest rate, therefore there will be _______ crowding out and ﬁscal policy will be “M--- effective than when investment is given by f. I = 150 e 1077 \ (1) f = 200 — an r ”(Ell (2) A. less, less, more l; B. more, less, more C. less, more, less D. more, more, less 12. If an autonomous decline in investment demand of 200 units causes 37 to increase by 300 units, then the marginal propensity to consume is _______... A. 1/3 B. 2/3 9;... ,3 D.3 i first *— i ...
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