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| 1 | |
Which of the following do neoclassical economists believe? |
| | A) | That, in equilibrium, the leakage of savings from the circular flow would always be matched by an equal amount of investment |
| | B) | That if savings exceed investment, the interest rate will fall |
| | C) | That surplus output would lead to a fall in prices |
| | D) | All of the above |
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| 2 | |
With which of the following terms are derivatives, hedge funds, sub-prime mortgages, and Fannie Mae all associated? |
| | A) | The Great Depression |
| | B) | The post–World War II economic boom period |
| | C) | The financial crisis of 2007–2010 |
| | D) | The stagflation years of the 1970s |
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| 3 | |
According to neoclassical economists, what would happen if total spending was less than total output? |
| | A) | Product prices would rise, but wage rates would fall. |
| | B) | Product prices would fall, but wage rates would rise. |
| | C) | Nominal GDP would rise, but real GDP would remain constant. |
| | D) | Both product prices and wage rates would fall. |
| | E) | Both product prices and wage rates would rise. |
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| 4 | |
Refer to Figure 13.7 to answer this question. According to neoclassicists, which of the following is true? |
| | A) | The horizontal axes of both graphs A and B show nominal GDP. |
| | B) | It is not possible for an economy to be at Y2 in graph B. |
| | C) | The shift from AD3 to AD4 is caused by an increase in the price level. |
| | D) | Graph A illustrates that changes in aggregate demand have no effect on the price level. |
| | E) | Graph B illustrates a Laffer-curve-type trade-off. |
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| 5 | |
Refer to Figure 13.7 to answer this question. According to Keynesians, which of the following is true? |
| | A) | The horizontal axes of graphs A and B show nominal GDP. |
| | B) | The shift from AD3 to AD4 illustrates what should have happened in the 1930s but did not. |
| | C) | Graph B illustrates a Phillips-curve-type trade-off. |
| | D) | A shift from AD1 to AD2 is the result of contractionary fiscal and monetary policy. |
| | E) | The economy is always automatically at income level Y1. |
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