In the simple keynesian model of aggregate output

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8) In the simple Keynesian model of aggregate output determination, an equilibrium level of output below that necessary to maintain full employment can be explained by (a) minimum wage laws. (b) a generous level of unemployment benefits. (c) relatively low aggregate demand. (d) all of the above. (e) none of the above. Answer: C Question Status: Previous Edition
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824 Frederic S. Mishkin • Economics of Money, Banking, and Financial Markets, Seventh Edition 9) The simple Keynesian model illustrates the idea that the economy can come to rest at a level of aggregate output 10) Keynes believed that an economy could attain an equilibrium level of output 11) Which of the following statements concerning Keynesian analysis are true? 12) Which of the following statements concerning Keynesian analysis are true? (a) Keynes’s 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, federal government spending, and state and local government spending. (b) Keynes recognized that equilibrium would occur in the economy when total quantity of output supplied (aggregate output produced) equals quantity of output demanded (Y ad ), that is, when Y = Y ad . (c) Keynes’s analysis involves explaining why wage rates are at a certain level by understanding what factors affect labor demand and why this could cause output to be greater than the economy is capable of producing, resulting in high inflation. (d) All of the above are true. Answer: B Question Status: Previous Edition Chapter 23 The Keynesian Framework and the ISLM Model 825
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