Macroeconomics Quiz Ch. 12

Consumption, investment, government spending, exports, and imports are:

all components of aggregate demand.

If markets throughout the global economy all have flexible and continually adjusting prices, then:

each economy will always head for its natural rate of unemployment.

According to the Keynesian framework, ________________________ may cause a recession, but not inflation.

a major trading partner's economic slowdown

The equilibrium quantity of labor increases and the equilibrium wage decreases when:

labor supply shifts to the right, if wages are flexible,

The economy is in a recession and the government wants to increase output. If the multiplier equals 3 and the government increases spending by 250, how much will output increase by?

750

Aggregate demand is more likely to _________________ than aggregate supply in the short run.

shift substantially

____________________ will not cause a shift of the AS curve in a Keynesian framework.

Changes in output prices

What data would be analyzed to determine whether any shift in the MPI has occurred over the course of the past 5-year period?

Exchange rates

According to macroeconomic theory, evidence that high unemployment may be accompanied by low inflation, and low unemployment may be accompanied by high inflation is supported by the:

Keynesian Phillips curve tradeoff.

In macroeconomics, a _________________ is used to show the relationship between output and the input price level.

Phillips curve

According to the Keynesian framework, which of the following may help a country reduce inflation, but will not help that country to get out of a recession?

a decrease in the tax rate on consumer income

According to the _____________________ argument, a market-oriented economy has no obvious way to implement a plan of systematic wage reductions.

coordination

If a Phillips curve shows that unemployment is high and inflation is low in the economy, then that economy:

is producing at a point where output is less than potential GDP.

The equilibrium quantity of labor and the equilibrium wage increase when:

labor demand shifts to the right, if wages are flexible.

In macroeconomics, what name is given to the costs of changing prices that businesses must consider?

menu costs

The sum of all the income received for contributing resources to GDP is called ___________________.

national income (Y)

Keynesian economics focuses on explaining why recessions and depressions occur, as well as offering a ______________________ for minimizing their effects.

policy prescription

The Keynesian economic framework is based on an assumption that:

prices and wages are sticky and do not adjust rapidly.

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?

recessionary gap