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 exceeds output.
B.   inventories are being depleted to meet demand.
C.   aggregate demand equals output.
D.   aggregate demand is less than output.
Question #2
An inflationary gap will exist when the full employment level of GDP is
A.   greater than equilibrium GDP.
B.   less than equilibrium GDP.
C.   greater than disposable income.
D.   equal to equilibrium GDP.
Question #3
Each C + I + G + (X - IM) expenditure schedule is drawn assuming a specific
A.   production level.
B.   price level.
C.   income 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.   economic planners.
D.   central bankers.
Question #5
Writing during the Great Depression, Keynes naturally focused on problems of
A.   budget deficits.
B.   hyperinflation.
C.   unemployment.
D.   trade deficits.
Question #6
As the multiplier process works through time, the size of the multiplier effect becomes
A.   larger.
B.   constant.
C.   smaller.
D.   explosive.
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.   shift the expenditure schedule downward and increase equilibrium real GDP.
C.   decrease both.
D.   increase 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.   expansionary gap.
C.   recessionary gap.
D.   inflationary gap.
Question #9
If inventory levels are decreasing, then we should expect business firms to
A.   increase output.
B.   decrease prices.
C.   decrease output.
D.   lay off workers.
Question #10
The basic reason for the multiplier effect is that, when you spend money,
A.   another person receives income.
B.   your money balances are reduced.
C.   your net worth decreases.
D.   another person must pay for it.

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