Which of the following assumptions is crucial to the classical model but not the Keynesian model? ...

Which of the following assumptions is crucial to the classical model but not the Keynesian model?
 
  a. The real wage always equals the marginal product of labor.
  b. Real wages are perfectly flexible.
  c. nominal wages are perfectly flexible.
  d. monetary policy primarily affects aggregate demand.
  e. both b and c.

Question 2

What did the fiscal conservatives of the Eisenhower administration (195361) want?
 
  (a) Balanced budgets and with manageable inflation
  (b) Inflation and budget surpluses
  (c) A balanced budget and high rates of interest
  (d) Laissez-faire economy

Question 3

Unions add costs to labor. Who ultimately absorbs the costs?
 
  (a) The employer
  (b) The union worker
  (c) The unorganized laborer
  (d) The consumer

Question 4

Population grew prodigiously during the colonial period. What was/were the most important factor(s) fueling this increase?
 
  (a) Immigration
  (b) Relatively low mortality and high birth rates
  (c) Relatively high mortality combined with high birth rates
  (d) Immigration and high birth rates

Question 5

With respect to the demand side, the classical model excludes
 
  a. exogenous changes in investment
  b. exogenous changes in government spending.
  c. exogenous changes in taxes.
  d. exogenous changes in money demand.
  e. All of the above

Question 6

If the nominal rate of interest on a bond was 7 percent, the inflation rate was 6 percent and an individual was in a 50-percent tax bracket, the after-tax real return on the bond would be equal to
 
  a. 0 percent.
  b. .5 percent.
  c. 6 percent.
  d. 7 percent.
  e. none of the above.

Question 7

Engerman's (1971) studies of the Civil War (18611865)'s impact on industrialization
 
  (a) support the previous work of Hacker and Beard.
  (b) showed that the War sped up the ongoing processes of industrialization.
  (c) showed that the War effort slowed down industrialization.
  (d) restricted the real cost of the War to the South.

Question 8

An economic rent is created when
 
  (a) organized labor pushes its members' wages above those of unorganized labor.
  (b) market forces determine prices and output.
  (c) businesses take market prices as given.
  (d) laborers accept competitive wages.

Question 9

When all else is held constant, during recessions government
 
  (a) revenues and expenditures increase.
  (b) revenues increase and expenditures decrease.
  (c) revenues decrease and expenditures rise.
  (d) revenues and expenditures decrease.

Question 10

The classical model differs from the Keynesian model in that
 
  a. monetary policy does not impact output in the Keynesian model.
  b. the classical model focuses on the long-run and the Keynesian model focuses on the short-run.
  c. fiscal policy is more powerful in the classical model than in the Keynesian model.
  d. the classical model believes monetary policy is a powerful impact on output and fiscal policy is not.
  e. None of the above

Question 11

According to the new classical system,
 
  a. an anticipated change in aggregate demand will cause labor suppliers to make price forecast errors and will, therefore, affect output and employment.
  b. anticipated changes in aggregate demand will not affect output and employment because labor suppliers have perfect information about the price level.
  c. unanticipated changes in aggregate demand will shift both the aggregate demand schedule and the aggregate supply schedule.
  d. both b and c.
  e. None of the above

Question 12

The arguments of Kessel and Alchien (1959) on the terms of trade and the question of who paid for the Civil War (18611865) conclude that 40 percent of the war's burden fell on
 
  (a) those who exported manufactures.
  (b) those who purchased imports.
  (c) farmers alone.
  (d) the economy as a whole.