Econ 102 - Principles of Macroeconomics » Fall 2022 » The Keynesian Model The Demand-Side Quiz

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Question #1
The equilibrium level of GDP is the level at which
A.   aggregate demand equals output.
B.   aggregate demand exceeds output.
C.   aggregate demand is less than output.
D.   inventories are being depleted to meet demand.
Question #2
An inflationary gap will exist when the full employment level of GDP is
A.   greater than disposable income.
B.   equal to equilibrium GDP.
C.   greater than equilibrium GDP.
D.   less than equilibrium GDP.
Question #3
Each C + I + G + (X - IM) expenditure schedule is drawn assuming a specific
A.   production level.
B.   income level.
C.   price level.
D.   spending level.
Question #4
In a market economy, the decisions about what to produce and how much of each good or service to produce are made by
A.   consumers and producers.
B.   central bankers.
C.   government officials.
D.   economic planners.
Question #5
Writing during the Great Depression, Keynes naturally focused on problems of
A.   hyperinflation.
B.   trade deficits.
C.   unemployment.
D.   budget deficits.
Question #6
As the multiplier process works through time, the size of the multiplier effect becomes
A.   smaller.
B.   larger.
C.   explosive.
D.   constant.
Question #7
If the price level rises, the effect on the expenditure schedule and equilibrium real GDP is to
A.   shift the expenditure schedule upward and decrease equilibrium real GDP.
B.   increase both.
C.   decrease both.
D.   shift the expenditure schedule downward and increase equilibrium real GDP.
Question #8
If the expenditure schedule must be shifted upward to reach potential GDP, then the economy is experiencing a (n)
A.   recessionary gap.
B.   expansionary gap.
C.   precautionary gap.
D.   inflationary gap.
Question #9
If inventory levels are decreasing, then we should expect business firms to
A.   lay off workers.
B.   increase output.
C.   decrease prices.
D.   decrease output.
Question #10
The basic reason for the multiplier effect is that, when you spend money,
A.   your money balances are reduced.
B.   another person receives income.
C.   another person must pay for it.
D.   your net worth decreases.

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