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

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