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According to Keynesians the primary reason money is not neutral is

According to Keynesians, the primary reason money is not neutral is

A) rational expectations.

B) price stickiness.

C) reverse causation.

D) misperceptions over the aggregate price level.

12) In the Keynesian model in the long run, an increase in the money supply will raise

A) the price level but not the level of output.

B) the level of output but not the price level.

C) both the level of output and the price level.

D) neither the level of output nor the price level.

13) Using the Keynesian model, the effect of an increase in the effective tax rate on capital would be to cause ________ in the real interest rate and ________ in output in the short run.

A) a decrease; a decrease

B) a decrease; no change

C) an increase; an increase

D) no change; a decrease

14) Using the Keynesian model, the effect of a decrease in the effective tax rate on capital would be to cause ________ in the real interest rate and ________ in output in the short run.

A) a decrease; a decrease

B) a decrease; no change

C) an increase; an increase

D) no change; a decrease

15) Using the Keynesian model, the effect of a decrease in the effective tax rate on capital would be to cause ________ in the real interest rate and ________ in output in the long run.

A) an increase; no change

B) a decrease; no change

C) an increase; an increase

D) no change; a decrease

16) Using the Keynesian model, the effect of a government-imposed ceiling on interest rates paid on personal checking accounts that is lower than the current market interest rate would be to cause ________ in the real interest rate and ________ in output in the short run.

A) a decrease; a decrease

B) a decrease; no change

C) a decrease; an increase

D) an increase; a decrease

17) In the Keynesian model, an increase in government purchases affects output by

A) increasing labor supply, because workers feel effectively poorer.

B) increasing saving to pay for future taxes, lowering the real interest rate and shifting the IS curve to the left.

C) increasing the real interest rate due to crowding out, reducing aggregate demand.

D) increasing aggregate demand as national saving declines.

18) In the Keynesian model in the short run, a decrease in government purchases causes output to ________ and the real interest rate to ________.

A) fall; rise

B) fall; fall

C) rise; rise

D) rise; fall

19) In the Keynesian model in the long run, an increase in taxes causes the price level to ________ and the real interest rate to ________.

A) fall; rise

B) fall; fall

C) rise; rise

D) rise; fall

20) Suppose the government decided to tighten monetary policy and decrease government expenditures. In the short run in the Keynesian model, the effect of these policies would be to ________ the real interest rate and ________ the level of output.

A) lower; decrease

B) lower; have an ambiguous effect on

C) have an ambiguous effect on; decrease

D) raise; decrease

21) Suppose the government decided to ease monetary policy, then increase taxes. In the short run in the Keynesian model, the effect of these policies would be to ________ the real interest rate and ________ the level of output.

A) lower; increase

B) lower; decrease

C) lower; have an ambiguous effect on

D) have an ambiguous effect on; increase

22) The 1980s were characterized by ________ monetary policy and ________ fiscal policy.

A) tight; easy

B) tight; tight

C) easy; easy

D) easy; tight

23) Easy monetary policy and tight fiscal policy lead to

A) high real interest rates.

B) low real interest rates.

C) roughly unchanged real interest rates.

D) roughly unchanged real interest rates only when Ricardian equivalence holds; otherwise, low real interest rates.

Jan 24 2020 Read more Less More

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