Question : 11) Keynes believed that an economy could attain an equilibrium : 1373863

 

11) Keynes believed that an economy could attain an equilibrium level of output

A) only at the full-employment level of output.

B) below the full-employment level of output.

C) only if the government took a “hands off” approach.

D) only if prices were falling.

12) Which of the following statements concerning Keynesian analysis is false?

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, government spending, and net exports.

B) Keynes recognized that equilibrium would occur in the economy when total quantity of output supplied equals quantity of output demanded (Yad), that is, when Y = Yad.

C) Keynes’s analysis involves explaining why aggregate output is at a certain level by understanding what factors affect each component of aggregate demand and how the sum of these components could add up to an output smaller than the economy is capable of producing, resulting in less than full employment.

D) Keynes’s analysis explains how the price level will change when the total quantity of output supplied changes.

 

13) 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 (Yad), that is, when Y = Yad

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) Keynes’s analysis explains how the price level will change when the total quantity of output supplied changes.

 

14) Because inflation was not a serious problem during the Great Depression, Keynes’s analysis assumed

A) that unemployment also was not a problem.

B) that the money supply was fixed.

C) that the price level was fixed.

D) that monetary policy is not effective.

 

15) Keynes reasoned that consumer expenditure is most closely related to

A) the level of interest rates.

B) the price level.

C) disposable income.

D) the marginal tax rate.

16) In the Keynesian model of income determination, consumer expenditure includes spending by

A) consumers on personal computers.

B) businesses on personal computers.

C) governments on personal computers.

D) foreigners on domestic personal computers.

 

17) The marginal propensity to consume (mpc) can be defined as the fraction of

A) a change in income that is spent.

B) a change in income that is saved.

C) income that is spent.

D) income that is saved.

 

18) If the consumption function is expressed as C = a + mpc × YD, then “mpc” represents

A) autonomous consumer expenditure.

B) the marginal propensity to consume.

C) the expenditure multiplier.

D) disposable income.

 

19) If the consumption function is expressed as C = a + mpc × YD, then “a” represents

A) autonomous consumer expenditure.

B) the marginal propensity to consume.

C) the expenditure multiplier.

D) disposable income.

 

20) If the consumption function is C = 20 + 0.5YD, then an increase in disposable income by $100 will result in an increase in consumer expenditure by

A) $25.

B) $70.

C) $50.

D) $100.

 

 

 

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