According to Keynesian economists,
a. the economy will return quickly to full employment in most cases
b. if output is below its potential, the economy will soon return to full employment
c. production can be stuck below its full-employment level for extended periods of time
d. the Great Depression proved that classical economics does a good job of explaining how the economy operates
e. he economy will achieve full employment in the short run but, in the long run, GDP will fluctuate
C
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John Maynard Keynes argued that the fundamental problem which led to the world depression was
A) insufficient demand for goods and services. B) a shortage of goods and services. C) negative net exports on goods and services. D) a decreasing supply of goods and services.
Give examples of factors that decrease aggregate demand. Which way does the aggregate demand curve shift?
What will be an ideal response?
A change in the price of a good has two effects on the quantity consumed. What are these effects?
A) the income effect and the substitution effect B) the consumption effect and expenditure effect C) the total utility effect and marginal utility effect D) the utility effect and the budget effect
There are two methods of calculating elasticities. One calculates the ratio of the percentage changes in quantity and price, and the other calculates the average percentage changes in quantity and price. We use the second method because it
a. involves an additional calculation b. is not sensitive to direction of movement c. is sensitive to direction of movement d. is never wrong e. always has the same sign