In the Keynesian AS/AD framework, an increase in government spending would lead to ____ pricelevels and _____ output.A)higher; higherB)lower; higherC)lower; lowerD)higher; lower

In the Keynesian AS/AD framework, an increase in government spending would lead to pricelevels and _ output.A)higher; higherB)lower; higherC)lower; lowerD)higher; lower

Economics For Today

10th Edition

ISBN:9781337613040

Author:Tucker

Publisher:Tucker

Chapter19: The Keynesian Model In Action

Section: Chapter Questions

Problem 4SQ

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Concept explainers

Laffer Curve Analysis

In terms of economics, the Laffer curve was popular among those economists who were or who belonged to the supply side of the economic peripheral. This concept was popularized by the famous supply-side economist known as Arthur Laffer. This curve illustrated the relationship between the tax rates and government revenue. It is already known that the tax which the public or individuals residing in an economy bear is the revenue or income of the government with the help of which the government does all the necessary works in the society, which is beneficial for the economy.

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In the Keynesian AS/AD framework, an increase in government spending would lead to ____ pricelevels and _____ output.A)higher; higherB)lower; higherC)lower; lowerD)higher; lower

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The Keynesian economic framework is based on an assumption that: A) an increase in government spending will cause the aggregate demand curve to shift to the left. B) people can afford a high level of government services. C) prices and wages are sticky and do not adjust rapidly. D) an increase in government spending will cause the aggregate demand curve to shift to the left.
Consumption, investment, government spending, exports, and imports are: Group of answer choices all complementary elements of a market-orientated economy. some of the opposing elements found in a market-orientated economy. all components of aggregate demand. some of the building blocks of Keynesian analysis.
Why would a Keynesian policy response not make much sense in response to a minor recession like the one that occurred in 1990? Please make response as simple as possible.
Differentiate between the following terms. Assumptions in AD/AS models and assumptions in Keynesian models.
Consider a simple Keynesian model. Which of the following will decrease planned aggregate expenditure? Government closes schools as a part of major restructureHouseholds prefer homemade meals to restaurant mealsAll the other optionsBusiness profitability is expected to go down
Consider a standard Keynesian model but with two types of consumers, Type A who have low marginal propensities to consume and Type B who have high marginal propensities to consume. An economy with relatively more Type A consumers is more vulnerable to a negative shock to investment demand.Answer true, false, or uncertain. Please briefly explain your answer.
The two principles that make a person a “Keynesian” consist of the ideology that the private economy may not reach full employment and that government spending can spur the economy into filling the gap. Give two examples that may be applied to the real world.