Which of the following statements is true? Question options: Keynes believed wages and prices are often too flexible - falling wages can cause a recession. Keynes believed an economy could get stuck in a recessionary gap. Keynes advocated running government surpluses in times of recession. Keynes believed the economy is self-regulating. b and c

Which of the following statements is true? Question options: Keynes believed wages and prices are often too flexible - falling wages can cause a recession. Keynes believed an economy could get stuck in a recessionary gap. Keynes advocated running government surpluses in times of recession. Keynes believed the economy is self-regulating. b and c

Economics (MindTap Course List)

13th Edition

ISBN:9781337617383

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter10: Keynesian Macroeconomics And Economic Instability: A Critique Of The Self Regulating Economy

Section: Chapter Questions

Problem 20QP

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Question 8
Keynes advocated the use of fiscal and monetary policy to stabilize an economy? When are the effects of these policies most beneficial? Select all that apply. Select one or more: In the short run When the economy is operating at full employment When the economy is operating significantly above full employment When the economy is operating significantly below full employment In the long run
Consider the following income/expenditure diagram in the simple Keynesian model. If taxes, T, were increased, then Group of answer choices A) The Y = C+S+T line would shift to the right, and equilibrium Y would increase. B) the C+I+G line would shift downward, and equilibrium Y would decrease. C) The Y = C+S+T line would shift to the left, and equilibrium Y would decrease. D) neither of the lines would shift, and equilibrium Y would stay the same. E) the C+I+G line would shift upward, and equilibrium Y would increase.
According to Keynes’ Law... A) The total demand for products determine the level of gross domestic product and may not equal the supply capacity of the economy in the short run. B) The total demand always equals the total supply capacity in the short run. C) The total demand tends to rise above the total supply capacity in the short run which leads to recessions D) The total supply of products determines the level of gross domestic product and the level of demand in the economy in the long run.
7. Deriving and exploring the total expenditures curve The following graph shows total production (TP) and the level of Natural Real GDP (NRGDP) for a hypothetical economy. When Real GDP is $325 billion, consumption is $275 billion, government purchases are $50 billion, and investment is $25 billion. When Real GDP is $375 billion, consumption is $300 billion, government purchases are $50 billion, and investment is $25 billion. Use the blue line (circle symbol) to plot the economy's total expenditure function within a simplified Keynesian framework. 450 425 X 400 375 TOTAL EXPENDITURE (Billions of dollars) 500 475 350 325 300 300 TP NRGDP 325 350 375 400 425 REAL GDP (Billions of dollars) 450 475 500 TE ?
In an economy, marginal propensity to consume (MPC) is 0.75 where Keynesian model works. Now, if government increases both its expenditure and taxes by 1000, then Income increases by 4000; Income increases by 3000; Income increases by 1000; Income do not change?
The balanced budget multiplier changes according to the values of the marginal propensity to consume and the marginal propensity to save. O False O True
Which of the following best differentiates the Keynesian View from the Classical View? The Classical View contains a SRAS curve while the Keynesian View does not include a SRAS curve. The Classical View only pertains to the short run while the Keynesian View only pertains to the long run. The Classical View only pertains to the long run while the Keynesian View pertains to both the short run and the long run. The Classical View contains an aggregate demand curve while the Keynesian View does not.
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