Which of the following is a basic difference between the classical model and the Keynesian model in which the Keynesian short-run aggregate supply curve exists?
A. The classical model uses real GDP, while the Keynesian model uses nominal GDP.
B. The classical model assumes that the position of the long run aggregate supply curve is determined by full employment, while the Keynesian model assumes that the long run aggregate supply curve will be to the left of full employment.
C. The classical model assumes that the level of real GDP is supply determined, while the Keynesian model assumes that it is demand determined.
D. The classical model assumes that the long run aggregate supply curve is vertical, while the Keynesian model assumes the long run aggregate supply curve is horizontal.
Answer: C
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Higher nominal interest rates ________ the amount of money demanded and higher real income ________ the amount of money demanded.
A. increase; increases B. increase; decreases C. decrease; decreases D. decrease; increases
According to the monetarists, the velocity of money is
A. constant by definition. B. highly variable and unpredictable. C. constant as a matter of empirical proof. D. not constant but predictable.
When is policy convergence, also known as Downsian policy convergence, likely to occur among political parties?
What will be an ideal response?
National income accounting can best be characterized as:
a. a set of rules used to summarize economic activity over a given period of time. b. a method for comparing different political systems. c. a microeconomic model of the economy used by the Federal Reserve bank. d. a statistical measure of the income received by consumers as opposed to businesses. e. a standardized economic report authored by politicians.