n the Keynesian model, is aggregate expenditure (AE) exceeds total production an unintended _________ will occur and business will __________. a) inventory reduction; increase production b) inventory reduction; decrease production c) inventory reduction; not change production d) inventory accumulation; decrease production e) inventory accumulation; increase productio

n the Keynesian model, is aggregate expenditure (AE) exceeds total production an unintended _ will occur and business will __. a) inventory reduction; increase production b) inventory reduction; decrease production c) inventory reduction; not change production d) inventory accumulation; decrease production e) inventory accumulation; increase productio

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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Similar questions

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
The simple Keynesian model a. understated the effect of an increase in government spending by neglecting the necessary decrease in the interest rate and consequent decrease in investment that accompany an increase in government spending. b. overstated the effect of an increase in government spending by neglecting the necessary decrease in the interest rate and consequent increase in investment that accompanies a decrease in government spending. c. overstated the effect of an increase in government spending by neglecting the necessary increase in the interest rate and consequent decline in investment that accompany an increase in government spending. d. understated the effect of an increase in government spending by neglecting the necessary increase in the interest rate and consequent decline in investment that accompany an increase in government spending.
In the Keynesian macroeconomic model, the equation for the savings function is given as: S = -420 + 1/4Y. Based on this information, which of the following statements is correct? (1) The marginal propensity to consume is 1/4;(2) The marginal propensity to save is -420; (3) At an income level of R1 000, the value of savings is 250;(4) At an income level of R1 000, the level of savings is -170.
In the Keynesian model, which of the following events lead to an increase in aggregate demand? (This is a multiple answer question. One of more options may be correct) a. An increase in the sales tax b. A new infrastructure project by the Federal government c. An increase in value of the Euro relative to the US-Dollar d. A drop in business confidence.
In the Keynesian Cross model, an increase in government purchases by one unit would generate an increase in output by less than one unit. True or False
In the Keynesian model, an increase in government spending increases ___. A.aggregate demand by an equal amount. B.aggregate demand by a multiple amount. C.the money supply by a multiple amount. D.the money supply by an equal amount.
Which one of the following statements is true? In the pre-Keynesian era, prices were assumed not to fully adjust. In the Keynesian model diagram, prices are fixed. GDP is a value of goods and services domestically produced in a country at a given point in time. Say's Law says that demand creates its own production. In the IS/LM model, the interest rate is a function of investment.
In the basic Keynesian model, a decline in autonomous spending: Group of answer choices a. reduces potential output. b. increases potential output. c. reduces short run equilibrium output. d. has no effect on short run equilibrium output.
Which of the following features of a Keynesian consumption function is not true? a. In the short run, current disposable income has the most impact on consumption. b. As income rises, so does the average tendency to consume. c. the average tendency to consume decreases as income increases decrease d .The marginal consumption propensity is smaller than one.
Keynesian economics predicts that if government policy makers deem current equilibrium real Gross Domestic Product (GDP) to be "too low," then an appropriate policy action would be to do nothing, because the economy is self-adjusting. raise government spending, thereby increasing aggregate demand and pushing up real Gross Domestic Product (GDP) with little or no inflationary consequences. increase taxes, thereby causing aggregate demand to increase and inducing a rise in real Gross Domestic Product (GDP) with little or no inflationary consequences. reduce the money stock, thereby causing aggregate demand to decrease and inducing a rise in fall in the price level that generates an increase in total planned expenditures.
According to the Keynesian cross model if the marginal propensity to consume is 2/3, cut in taxes of 120 Billion increases equilibrium income by a) 160 Billion b) 180 Billion C) 240 Billion d) 360 Billion
A key difference between neoclassical and Keynesian economists is how to predict and treat the future growth of the economy. Neoclassicalists believe the focus should be on ____________ and Keynesians believe the focus should be on _________________. A, B, C, OR D ONE ANSWER A short-term problems; long-term problems B long-term problems; short-term problems C long-term problems; long-term problems D short-term problems; short-term problems