The condition required for equilibrium to exist according to Keynesian analysis is that
a. foreign trade must be in balance.
b. taxes must be equal to government spending.
c. total planned injections must be equal to total planned leakages.
d. employment must be full.
c. total planned injections must be equal to total planned leakages.
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Use the following figure showing the domestic demand and supply curves for product B in a hypothetical economy to answer the next question.
Prior-to-trade (autarky) total economic surplus equals areas
A. A + B + C + E + F + J + I. B. A + B + C + D. C. A + B + C. D. A + B + C + E + F.
Which of the following explains why the aggregate demand curve is downward sloping?
A) the open economy effect B) the real-balance effect C) the interest rate effect D) all of the above
When a bank makes loans with excess reserves, it
A. creates money. B. destroys money. C. alters the composition of M1. D. leaves the money supply unchanged.
Adjusting nominal Gross Domestic Product (GDP) for price changes from a base year yields
A. current Gross Domestic Product (GDP). B. real Gross Domestic Product (GDP). C. Gross Domestic Product (GDP) net of relative price changes. D. constant disposable income.