Chapter 11 MC

Which of the following is the most accurate statement about meeting our current economic needs? a. John Maynard Keynes, rather than Jean baptiste Say, is providing the economic answers we need. b. Say, rather than Keynes, is providing the economic answers we need. c. Neither Keynes nor say is providing the economic answers we need d. together, Keynes and Say are providing the economic answers we need.

C. Neither Keynes nor Sayis providing the economic answers we need

Which statement best describes the classical theory of employment? a. we will always have a great deal of unemployment b. We will usually have a great deal of unemployment c. We will occasionally have some unemployment, but our economy will automatically move back toward full employment d. We never have any unemployment

We will occasionally have some unemployment, but our economy will automatically move back toward full employment

Until the Great Depression, the dominant school of economic thought was____ a. classical economics b. Keynesian economics c. supply-side economics d. monetarism

a. classical economics

People work, according to Jean Baptiste Say, so that they can____ a consume b. save c. stay busy d. none of these

a. consume

According to Keynes, our economy always tends toward___ a. equilibrium GDP b. full employment GDP c. recessions d. inflations

a. equilibrium GDP

According to the classical economists, if the amount of money people are planning to invest is greater than the amount that people want to save, _____ a. interest rates will rise and saving will rise b. interest rates will fall and saving will fall c. interest rates will fall and saving will rise d. interest rates will rise and saving will fall

a. interest rates will rise and saving will rise

When aggregate demand is greater than aggregate supply, _____. a. inventories get depleted and output rises b. inventories get depleted and output falls c. inventories rise and output rises d. inventories rise and output falls

a. inventories get depleted and output rises.

Keynes and the classical economics would agree that ___ a. our economy is always at equilibrium or tending toward equilibrium b. our economy is never at or tending toward equilibrium c. the prime mover of our economy is aggregate supply d. the prime mover of our economy is aggregate demand

a. our economy is always at equilibrium or tending toward equilibrium

Keynes said___ a. the expected profit rate was more important than the interest rate b. the interest rate was more important than the expected profit rate c. the expected profit rate and the interest rate were equally important d. neither the expected profit rate nor the interest rate was important.

a. the expected profit rate was more important than the interest rate

As the price level rises, ___ a. the quantity of goods and services demanded falls b. the quantity of goods and services demanded rises c. the quantity of goods and services demanded stays the same d. none of the above is correct

a. the quantity of goods and services demanded falls

Keynes considered full employment GDP to be ___ a. the normal state of economic affairs b. a rare occurrence c. an impossibility d. none of these

b. a rare occurence

Keynes was concerned mainly with ___ a. aggregate supply b. aggregate demand c. the interest rate d. inflation

b. a rare occurrence

According to the classical economists,____ a. people will always spend all their money b. any money that is saved will be invested c. saving will always be greater than investment d. saving will always be smaller than investment

b. any money that is saved will be invested

The classical economists believed in ___ a. strong government intervention b. laissez-faire c. rapid growth in the money supply d. none of these

b. laissez-faire

"Our economy is always at full employment" was a claim made by___ a. both Keynes and the classicals b. neither Keynes nor the classicals c. Keynes but not the classicals d. the classicals but not Keynes

b. neither Keynes nor the classicals

If we are operating in the classical range of the aggregate supply curve and aggregate demand rose, then___ a. output would rise and the price level would remain the same b. output would remain the same and the price level would rise c. output would rise and the price level would rise d. output would remain the same and the price level would remain the same

b. output would remain the same and the price level would rise

To end a bad recession, we need to ___ a. go to war b. spend a lot of money c. balance the federal budget

b. spend a lot of money

That we are always tending toward full employment is a belief of____ a. Keynes b. the classicals c. both Keynes and the classicals d. neither Keynes nor the classicals

b. the classicals

John Maynard Keynes is most closely associated with the ___ a.American Revolution b. French Revolution c. Great Depression d.Russian Revolution

c. Great Depression

When the economy is in disequilibrium, ___ a. production automatically rises b. production automatically falls c. it automatically moves back into equilibrium d. it stays in disequilibrium permanently

c. it automatically moves back into equilibrium

Which of the following antirecession programs would not be one that John Maynard Keynes would have prescribed? a. the New Deal under President Franklin Roosevelt b. the one trillion dollar Japanese public works program of the 1990s c. Letting the forces of supply and demand allow the economy to reattain full employment d. burying bottles containing bank notes

c. letting the forces of supply and demand allow the economy to reattain full employment

When saving is greater than investment, we are ___ a. at equilibrium GDP b. at full employment GDP c. below equilibrium GDP d. above equilibrium GDP

d. above equilibrium GDP

Our economy is definitely at equilibrium in each case except when___ a. saving equals investment b. aggregate demand equals aggregate supply c. the amount people are willing to spend equals the amount that producers are producing d. equilibrium GDP equals full employment GDP

d. equilibrium GDP equals full employment GDP

Each of the following supports the classical theory of employment except___ a.Say's law b.wage price flexibility c. the interest mechanism d. government spending programs

d. government spending programs

The classical economists' aggregate supply curve is vertical____ a. both in the short run and in the long run b. in neither the short run nor the long run c. in the short run, but not in the long run d. in the long run, but not in the short run

d. in the long run, but not in the short run

Keynes believed ____ a. recessions were temporary b. once a recession began, it would always turn into a depression c. the real problem that modern economies faced was inflation d. none of these

d. none of these

Say's law states that ___ a. we can have an inflation or recession, but never both at the same time b. the normal state of economic affairs is recession c. demand creates its own supply d. supply creates its own demand

d. supply creates its own demand

The slope of the aggregate demand curve is explained by each of the following except____ a. the real balance effect b. the interest rate effect c. the foreign purchases effect d. the profit effect

d. the profit effect