Economy Chapter 11 - Assignment Essays

question

The Classical view of the economy is characterized by:

answer

a laissez-faire approach (prior to the 1930's the economists thought there could never be a depression. Economists of the time believe the market to be inherently STABLE).

question

The Classical approach dominated economic policy during:

answer

The period before the Great Depression. (Prior to the 1930's and before the Great Depression classical economists were the thinkers of the time)

question

According to Say's Law, all goods produced will be sold:

answer

If prices are flexible and free to change. (goods will be sold when buyers and sellers find an acceptable price)

question

Keynesian theory became important when classical economic theory did not adequately explain a prolonged period of:

answer

DEFLATION WITH HIGH UNEMPLOYMENT (in the 1930's unemployment rates rose to unprecedented heights and states high for a decade. falling wages and prices did not restore full employment. this macro failure prompted calls for new theories and policies to control the business cycle).

question

According to the real balances effect, when the price level:

answer

Falls, cash is worth more and therefore people buy more.(when real income and wealth increase because of a decline in the price level, consumers respond by buying more goods and services).

question

The aggregate supply curve is positively sloped because as the price level increases:

answer

profit margins increase in the short run (because many costs are relatively constant in the short run, higher prices for goods and services tend to widen profit margins).

question

At macro equilibrium:

answer

aggregate demand equals aggregate supply (the unique combination of price level and output that is compatible with both buyers' and sellers' intentions).

question

Which of the following is likely to cause a leftward shift in the aggregate supply curve, ceteris paribus?

answer

An increase in the cost of natural gas. (an increase in natural gas directly increases the cost of production making producers less willing and able to supply goods at prevailing prices.

question

If the stock market plunged over the next week, consumers would:

answer

Demand fewer goods and services.(seeing their accumulated wealth vanish, consumers might decide to save more and spend less).

question

Which of the following is a mechanism Keynes advocated for dealing with a situation of depressed output?

answer

increasing government expenditure (the economy would not self-adjust an increase in government spending would stimulate the economy).

question

According to monetary theories, an increase in the money supply shifts the aggregate:

answer

Demand curve to the right. (monetary theories focus on the control of money and interest rates as a mechanism for shifting the aggregate demand curve).

question

Keynesian policy levers include:

answer

FISCAL POLICY(fiscal policy is the use of government tax and spending powers to alter economic outcomes.)

question

Policy levers and external shocks are determinants of macroeconomic performance.

answer

True (internal market forces, external shocks and policy levers are the macro determinants).

question

According to Keynes, the economy is basically stable and government intervention is not required.

answer

False.
Keynes' view is that the inherent instability of the marketplace required government intervention.

question

One reason why the quantity of real output supplied rises with the price level, ceteris paribus, is because profits are higher.

answer

True.
Quantity of real output supplied will go up when suppliers see that they can make more profit.

question

If, at the prevailing price level, the aggregate quantity supplied exceeds the aggregate quantity demanded, the price level will tend to fall.

answer

True.
Price will fall due to surplus.

question

Most modern economists believe the economy performs best without government intervention in the form of policy levers.

answer

False.
Various policy levers in or macro model have all been used at one time or another

1 of 17

question

The Classical view of the economy is characterized by:

answer

a laissez-faire approach (prior to the 1930's the economists thought there could never be a depression. Economists of the time believe the market to be inherently STABLE).

question

The Classical approach dominated economic policy during:

answer

The period before the Great Depression. (Prior to the 1930's and before the Great Depression classical economists were the thinkers of the time)

question

According to Say's Law, all goods produced will be sold:

answer

If prices are flexible and free to change. (goods will be sold when buyers and sellers find an acceptable price)

question

Keynesian theory became important when classical economic theory did not adequately explain a prolonged period of:

answer

question

According to the real balances effect, when the price level:

answer

Falls, cash is worth more and therefore people buy more.(when real income and wealth increase because of a decline in the price level, consumers respond by buying more goods and services).

question

The aggregate supply curve is positively sloped because as the price level increases:

answer

profit margins increase in the short run (because many costs are relatively constant in the short run, higher prices for goods and services tend to widen profit margins).

question

At macro equilibrium:

answer

aggregate demand equals aggregate supply (the unique combination of price level and output that is compatible with both buyers' and sellers' intentions).

question

Which of the following is likely to cause a leftward shift in the aggregate supply curve, ceteris paribus?

answer

An increase in the cost of natural gas. (an increase in natural gas directly increases the cost of production making producers less willing and able to supply goods at prevailing prices.

question

If the stock market plunged over the next week, consumers would:

answer

Demand fewer goods and services.(seeing their accumulated wealth vanish, consumers might decide to save more and spend less).

question

Which of the following is a mechanism Keynes advocated for dealing with a situation of depressed output?

answer

increasing government expenditure (the economy would not self-adjust an increase in government spending would stimulate the economy).

question

According to monetary theories, an increase in the money supply shifts the aggregate:

answer

Demand curve to the right. (monetary theories focus on the control of money and interest rates as a mechanism for shifting the aggregate demand curve).

question

Keynesian policy levers include:

answer

FISCAL POLICY(fiscal policy is the use of government tax and spending powers to alter economic outcomes.)

question

Policy levers and external shocks are determinants of macroeconomic performance.

answer

True (internal market forces, external shocks and policy levers are the macro determinants).

question

According to Keynes, the economy is basically stable and government intervention is not required.

answer

False.
Keynes' view is that the inherent instability of the marketplace required government intervention.

question

One reason why the quantity of real output supplied rises with the price level, ceteris paribus, is because profits are higher.

answer

True.
Quantity of real output supplied will go up when suppliers see that they can make more profit.

question

If, at the prevailing price level, the aggregate quantity supplied exceeds the aggregate quantity demanded, the price level will tend to fall.

answer

True.
Price will fall due to surplus.

question

Most modern economists believe the economy performs best without government intervention in the form of policy levers.

answer

False.
Various policy levers in or macro model have all been used at one time or another

Order an Essay Now & Get These Features For Free:

Turnitin Report

Formatting

Title Page

Citation

Outline

Place an Order