Week 9 Economics PSOS

If a neoclassical model shows increasing wages in the economy over the long run, what else will likely occur? Select one: a. inflationary increase in price level b. substantial short-term off-setting decrease in output c. short-run decrease in cyclical unemployment d. change in government policy to decrease in aggregate demand

A

If an economy experiences a decrease in aggregate demand due to a decline in consumer confidence and output falls below potential GDP, which of the following is likely to occur? Select one: a. a rise in unemployment b. more consumption and less saving c. adjustment back to potential GDP d. increase in price inflation

A

The equilibrium quantity of labor increases and the equilibrium wage decreases when: Select one: a. labor supply shifts to the right, if wages are flexible. b. labor demand shifts to the left, if wages are flexible. c. labor demand shifts to the right, if wages are flexible. d. labor supply shifts to the left, if wages are flexible.

A

The neoclassical view holds that long-term expansion of potential GDP due to _______________________ will determine ____________________. Select one: a. economic growth; the size of the economy b. government spending; aggregate supply c. government spending; aggregate demand d. economic adjustments; cyclical unemployment

A

Why do neoclassical economists tend to put relatively more emphasis on long-term growth than on fighting recession? Select one: a. standard of living is ultimately determined by long-term growth b. price and wage stickiness is reasonable in the short run c. government focuses more on recession and cyclical unemployment d. upward trend of potential GDP determines the rate of inflation

A

Consumption, investment, government spending, exports, and imports are: Select one: a. all complementary elements of a market-orientated economy. b. all components of aggregate demand. c. some of the building blocks of Keynesian analysis. d. some of the opposing elements found in a market-orientated economy.

B

In a Keynesian cross diagram, what name is given to the distance between an output level that is below potential GDP and the level of potential GDP? Select one: a. national income (Y) b. recessionary gap c. expenditure-output d. inflationary gap

B

The Keynesian view of economics assumes that: Select one: a. economic output is primarily determined by aggregate supply. b. wages are sticky. c. the Keynesian Phillips curve is vertical. d. the economy must focus is on long-term growth.

B

The shape of the ______________ involves a tradeoff between unemployment and inflation. Select one: a. aggregate demand curve b. Phillips curve c. Keynesian demand curve d. aggregate supply curve

B

Which of the following is a building block of neoclassical economics? Select one: a. sticky wages and prices b. wages and prices will adjust in a flexible manner c. the size of the economy is determined by real GDP d. aggregate demand model

B

In the neoclassical view, the economy has a ___________________________ to move back to potential GDP. Select one: a. rational tendency b. immediate tendency c. tendency to be unable d. self-correcting tendency

D

____________________ will not cause a shift of the AS curve in a Keynesian framework. Select one: a. Changes in inputs b. Changes in output price c. Prices of inputs d. Changes in input prices

B

If a Phillips curve shows that unemployment is high and inflation is low in the economy, then that economy: Select one: a. is producing at a point where output is more than potential GDP. b. is producing at its equilibrium point. c. is producing at a point where output is less than potential GDP. d. is producing at its potential GDP.

C

In a Keynesian cross diagram, what name is given to the distance between an output level that is below potential GDP and the level of potential GDP? Select one: a. national income (Y) b. inflationary gap c. recessionary gap d. expenditure-output

C

Suppose that out of the original 100 increase in government spending, 60 will be recycled back into purchases of domestically produced goods and services. Following this multiplier effect, what value will be recycled in the next round in the cycle? Select one: a. 16.66 b. 42 c. 36 d. 3.6

C

The ___________________ argument tends to view inflation as a cost that offers no offsetting gains in terms of lower unemployment? Select one: a. market forces b. flexible wage and price c. neoclassical d. Keynesian

C

Which of the following is a distinguishing characteristic of a Keynesian cross diagram? Select one: a. real GDP on the horizontal axis b. a flat line c. 45-degree line d. several different Phillips curves

C

Which of the following represents a Keynesian point of view of macroeconomics? Select one: a. vertical aggregate supply b. aggregate supply is the primary determinate of economic output c. creating increases in aggregate demand to reduce unemployment d. focus on long-term growth in the economy

C