Briefly explain why changes in government spending or taxes do not have independent effects on aggregate demand. What does shift the aggregate demand curve in the classical model? What will be an ideal response? ANSWER Government spending and taxes do not have independent effects on aggregate demand because of the adjustment of the interest […]
Within the IS-LM curve model, a decline in expectations would a. lower income and the interest rate. b. increase income and lower the interest rate. c. lower income, but leave the interest rate unchanged. d. lower the interest rate, but leave income unchanged. e. lower income and increase the interest rate. ANSWER A
The largest component of GDP in the US is typically: a. government purchases. b. social securtity. c. consumption. d. investment. e. net exports. ANSWER C
The American manufacturing system began to emerge in the years prior to the Civil War. Which of the following was not an important aspect of the system? (a) Extensive or increased use of craftsmen (b) Mass production of goods in factories (c) The production of standardized goods (d) Extensive use of machinery and equipment […]
Which statement best defines the classical perspective? a. Aggregate supply determines aggregate demand. b. Aggregate demand does not matter for anything. c. Aggregate supply determines real variables such as output. d. Aggregate demand determines all endogenous variables. ANSWER C
In a steady-state economy with no population growth, output per worker is 35, the saving rate is 20 percent, and the depreciation rate is 11 percent. The level of capital per worker is ________. A) 64 B) 19 C) 39 D) 28 ANSWER A
The IS curve shifts when all of the following variables change except a. tax rates. b. interest rates. c. government spending. d. the marginal propensity to consume. e. both b and d. ANSWER B
All but which of the following people supplied labor in colonial America? (a) Members of the free population in England and other parts of Northern Europe. (b) Native Americans (c) Slaves (d) Indentured servants ANSWER (b)
Which of the following statements are correct? In (the) a. Keynesian model, unemployment is voluntary. b. real business cycle models, all unemployment is voluntary. c. new classical models, there is voluntary unemployment. d. Both b and c e. All of the above ANSWER D
A usual assumption in real business cycle models is that the economy is populated by a group of identical individuals and the behavior of the group can then be explained in terms of the behavior of one individual, called a(n) a. maximizing agent. b. representative agent. c. republican agent. d. informative agent. e. democratic agent […]
