08 Jun Question The idea that supply creates its own demand is known as
Question
The idea that supply creates its own demand is known as
the law of supply.
the law of demand.
Keynes’ law.
Say’s law.
Question
2 of 30
According to the circular flow of income and output, saving causes
total output to fall.
consumption expenditures and total output to fall.
consumption expenditures to fall short of total output.
investment spending to fall.
Question
3 of 30
A classical model of the economy predicts
full employment in the long run.
a 15-20% unemployment level whenever the economy is in equilibrium.
the same unemployment rates as the Keynesian model.
cyclical changes in the unemployment rate.
Question
4 of 30
According to classical theory, a shift in aggregate demand will affect
the price level only.
real gross domestic product (GDP) only.
the level of employment only.
both real GDP and the level of employment.
Question
5 of 30
At higher rates of interest
households save less because it is more expensive to save.
households save more because they get a greater return on their savings.
businesses demand more investment because future profitability is likely to be greater.
businesses demand more investment because there are more funds that are available to invest.
Question
6 of 30
According to the Keynesian model, the short-run aggregate supply (SRAS) curve is horizontal when
real GDP is at full capacity, but prices are not flexible.
there are no unemployed resources, and wages do not change when prices change.
prices react to an aggregate demand shock, but real GDP does not.
there are unemployed resources, and prices do not fall when aggregate demand falls.
Question
7 of 30
A decrease in aggregate demand will cause
prices to fall according to classical economists, and unemployment to increase according to Keynes.
prices to fall and unemployment to increase according to both classical economists and Keynes.
aggregate supply to fall according to classical economists, and prices to fall according to Keynes.
aggregate supply to fall according to Keynes, and unemployment to increase according to classical economists.
Question
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