Econ 002 - Principles of Macroeconomics » Winter 2021 » Module 7 Quiz
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Question #1
What does a Keynesian analysis of economics assume?
A.
Macroeconomics must focus on growth in the long-term.
B.
Prices are sticky.
C.
It is aggregate supply that is the primary determinant of economic output..
Question #2
When the housing market crashed in 2007, Keynesian economists might have predicted a
A.
increase in home purchases, as expected future incomes increased
B.
decrease in consumption expenditure, as household wealth declined.
C.
decrease in government spending to match declining tax revenues
Question #3
Consumption, investment, government spending, and net exports are
A.
all components of aggregate demand.
B.
some of the opposing elements found in a market economy.
C.
all complementary elements of a market economy
Question #4
When firms determine how much investment spending to make, they will strongly consider ________.
A.
interest rates
B.
their wealth
C.
past profits
Question #5
What are some of the reasons, according to Keynesian analysis, of why economies have recessions and depressions?
A.
Over the long-term, the aggregate supply curve shifts.
B.
The larger macroeconomy tends to adjust slowly to shifts in aggregate demand because of sticky prices.
C.
Businesses operate at full employment when aggregate demand is high enough to motivate them to hire more labor.
Question #6
Consider the following scenario. If foreign goods are relatively more expensive than U.S. goods, exports from the U.S. rise. How would this scenario make the aggregate demand curve change?
A.
The AD curve would shift to the right.
B.
The AD curve would remain unchanged.
C.
The AD curve would shift to the left.
Question #7
If U.S. goods are relatively cheaper compared with goods of foreign places, then U.S. exports are likely to rise. This would make the aggregate demand curve ________.
A.
remain the same.
B.
shift to the right
C.
shift to the left
Question #8
If an economist is using the macroeconomic theory that low inflation may be associated with high unemployment, and high inflation may contribute to low unemployment, what theory is the economist considering?
A.
The Keynesian Phillips curve tradeoff.
B.
A neoclassical aggregate demand-aggregate supply model.
C.
A Keynesian cross diagram.
Question #9
Fill in the blanks. According to the Keynesian perspective, the government ________ play a role in managing the macroeconomy ________.
A.
should not; especially when actions by consumers, firms, and trading partners fall short of expectations
B.
should; when the aggregate demand does not match the aggregate supply
C.
should not; when there is unemployment and inflation
Question #10
If an economic decision is based on the Keynesian perspective, it proposes that the government should ________ in managing the macroeconomy when ________.
A.
play a role; there is inflation and unemployment
B.
play a role; the aggregate demand has a significant gap with the aggregate supply
C.
not play a role; actions by consumers, firms, and trading partners fall short of expectations
Question #11
The ________ is a graphical relationship between income and consumer spending.
A.
consumption function
B.
income-expenditure model
C.
spending model
Question #12
What are the components used to create a consolidation view or stacked graph (or stacking on top of each other) of the aggregate expenditure function?
A.
The graph would include the consumption function (after taxes) the government spending function, and the net export function.
B.
The graph would include the consumption function (after taxes), the investment function, and the government spending function.
C.
The graph would include the consumption function (after taxes), the investment function, the government spending function, and the net export function.
Question #13
Of the following statements about investment, which is true when it comes to explaining its function with regards to national income?
A.
There is a relationship between the investment function and the GDP.
B.
The investment function on a graph is drawn as a horizontal line.
C.
The investment function has a slope of one.
Question #14
Each of the following statements are about government spending as function of national income. Which one of the statements is a false statement?
A.
There is fluctuation in government spending.
B.
The budget process is what is used by the federal, state and local governments determine the level of government spending
C.
On a Keynesian cross diagram the government spending appears as a horizontal line.
Question #15
The aggregate expenditure determines the total amount that firms and households plan to spend on goods and services at each level of income. Therefore this model focuses on the short run relationship between ________ and national income or GDP.
A.
real savings
B.
real interest rates
C.
real spending
Question #16
Consumption still exists even if income is zero because ________.
A.
people would get things on sale
B.
people always make a basic income no matter what
C.
people still have basics needs they must meet
Question #17
A.
does not affect
B.
steepens
C.
flattens
Question #18
Aggregate Expenditure equals
A.
C + I + G + (X-M).
B.
C + I + G + gross exports.
C.
C + I + G + import spending.
Question #19
Which of the following is excluded from being a component of the aggregate expenditure model?
A.
government spending
B.
import spending
C.
consumption
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