ECN Lesson 7 Exam Questions with Correct Answers 2024/2025 Latest Update
According to the classical model, the income that is generated by production is - Answer- enough to purchase all the goods and services produced.
The short-run aggregate supply curve in modern Keynesian analysis represe...
According to the classical model, the income that is generated by production is -
Answer- enough to purchase all the goods and services produced.
The short-run aggregate supply curve in modern Keynesian analysis represents the
relationship between - Answer- the real output of goods and services in the economy
and the price level when people have not fully adjusted their behavior.
Which of the following is not an assumption of the classical model? - Answer- Wages
and prices are fixed.
Demand-pull inflation is caused by - Answer- aggregate demand increasing along an
upward-sloping or a vertical aggregate supply curve.
According to Keynes, wages are inflexible because - Answer- of unions and long-term
contracts.
According to classical economists, a decrease in the rate of interest will - Answer-
increase business investment.
A decrease in aggregate demand will cause - Answer- prices to fall according to
classical economists, and unemployment to increase according to Keynes.
The significant run-up in oil prices during the late 2000s was an example of - Answer-
an aggregate supply shock that increased the price level and reduced the rate of growth
of real GDP.
The Keynesian short-run aggregate supply curve in the simplified Keynesian model is
unrealistic because - Answer- some price adjustments do take place in the short run.
The idea that supply creates its own demand is known as - Answer- Say's law.
According to the circular flow of income and output, saving causes - Answer-
consumption expenditures to fall short of total output.
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