Test 3-Econ303

Front 1

Which of the following are equilibrium conditions in the simple keynsian model?

Back 1

Ir=I, S+T=I+G, Y=C+I+G...ALL OF THE ABOVE

Front 2

According to keynes, the level of consumer expenditures was a stable function of

Back 2

disposable income

Front 3

The marginal propensity to consume is

Back 3

the change in consumption associated with a change in income

Front 4

Keynes believed that the instability in income was caused by the variability in

Back 4

investment

Front 5

The most important determinant of any multiplier in the keynsian model is

Back 5

the marginal propensity to consume

Front 6

If the narginal propensity to consume is equal to 0.8 in the simple keynsian model, then a 10 unit increase in government spending will cause output to rise by

Back 6

50 units

Front 7

in the circular flow model, injections are associated with

Back 7

government spending and investment

Front 8

When firms incur an unplanned increase in inventories, they typically

Back 8

lay off workers and reduce production

Front 9

If the consumption function is goven by c=100
+.5(y-t) and unplanned investment is 150, government spending is 50, and T is 100, then equilibrium income is

Back 9

500

Front 10

Which of the following equations illustrates the equilibrium level of income in terms of autonomous expenditures and the multiplier in simple keynsian closed-economy model?

Back 10

Y=[1/(1-b)](a-bT+I+G)

Front 11

income has risen in the simple keynsian model. this could be a result of:

Back 11

an equal increase in government spending in taxes

Front 12

Compared to the closed economy keynsian model, the open economy model in which imports are a function of income have an investment multiplier that is

Back 12

smaller

Front 13

Withing the simple keynsian model with lump-sum taxes, if the MPC 9b) were 0.75 and taxes rise by $200 then income would

Back 13

fall by $600

Front 14

According to keynes' theory of money demand, an interest rate below an individual's "critical" rate signals the likelihood of future ____ in the interest rate and subsequent capital ____ on bonds

Back 14

increase;gain

Front 15

According to the keynsian model of the money market, the supply of money

Back 15

is chosen by the central bank

Front 16

The money demand curve shifts to the right when

Back 16

there is a change in liquidity preferance such that bonds are perceived as more risky AND income increases

Front 17

At any point on the LM curve

Back 17

money supply equals money demand

Front 18

A decrease in the money supply will shift the LM curve

Back 18

to the left

Front 19

The IS curve represents

Back 19

all points of r and y where the output market is in equalibrium

Front 20

The IS curve will shift to the right if:

Back 20

taxes decrease

Front 21

The idea that an increase in savings will make a country poorer is

Back 21

called the "paradox of thrift"

Front 22

If the economy is in a liquidity trap, then:

Back 22

monetary policy cannot stimulate the economy by lowering interest rates