Keynesians believe that an increase in the money supply will lead to:
a. both c and d.
b. all of the following.
c. an increase in the price level.
d. a decrease in nominal GDP.
e. an increase in real GDP.
QUESTION 2Andrea Burris lost her job in a company layoff 5 months ago. She would take a job if one was offered, but she has given up looking for work until the economy improves. She is:
a. a member of the civilian labor force who is employed.
b. a member of the civilian labor force who is unemployed.
c. a member of the civilian labor force who is underemployed.
d. a discouraged worker who is not a member of the labor force.
e. now structurally unemployable.
QUESTION 3If the marginal propensity to consume (MPC) is 0.75, and if the goal is to increase real GDP by 400 million, then by how much would government spending have to change to generate this increase in real GDP?
a. 140 million.
b. 100 million.
c. 200 million.
d. 400 million.
QUESTION 4According to Keynesians, an increase in the money supply will:
a. decrease the interest rate, and increase investment, aggregate demand, prices, real GDP, and employment.
b. decrease the interest rate, and decrease investment, aggregate demand, prices, real GDP, and employment.
c. increase the interest rate, and decrease investment, aggregate demand, prices, real GDP, and employment.
d. only increase prices.
QUESTION 5Elisa Kilhafer, a housewife in St. Louis, Missouri, who claims on a Bureau of Labor Statistics (BLS) survey that she is neither gainfully employed nor looking for work, is, according to the BLS:
a. considered retired.
b. counted as unemployed.
c. considered reemployable.
d. counted as a member of the labor force.
e. not counted as a member of the labor force.
QUESTION 6If the marginal propensity to consume (MPC) is 0.75 and if policy makers wish to increase real GDP by 300 million to fight a recession, then by how much would taxes have to change?
a. -30 million
b. -50 million
c. -100 million
d. -300 million
QUESTION 7Keynesian economists argue that monetary policy works through its effects on:
a. interest rates and investment.
b. price- and wage-flexibility.
c. budget deficits and trade deficits.
d. the spending and money multipliers.
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