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

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