Keynesian theory is based on the hypothesis that
A. saving is influenced primarily by real current disposable income.
B. planned savings equal planned investment only at full employment.
C. saving is always equal to savings.
D. saving is influenced primarily by the interest rate.
Answer: A
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What happens in the steady state to the capital—labor ratio, output per worker, and consumption per worker when each of the following events occur? You should assume that the steady-state capital—labor ratio is below the Golden Rule level
(a) Productivity falls. (b) Population growth falls. (c) The saving rate falls. (d) The depreciation rate falls.
In the steady state of Solow's exogenous growth model, an increase in the savings rate
A) increases output per worker and increases capital per worker. B) increases output per worker and decreases capital per worker. C) decreases output per worker and increases capital per worker. D) decreases output per worker and decreases capital per worker.
Keynesians and non-Keynesians would largely agree on which one of the following statements?
a. Expansionary fiscal policy will tend to substantially increase current real output. b. Proper timing of discretionary fiscal policy is difficult to achieve. c. The use of discretionary fiscal policy is an important stabilization tool. d. Market forces will automatically direct the economy toward full employment.
An elected official will:
a. tend to favor policies that wield benefits in the short run and impose costs in the long run b. tend to favor policies that impose costs in the short run and yield benefits in the long run c. both of the above d. neither of the above