Chapter 11

John Maynard Keynes is most closely associated with the ( \(\mathrm{O5})\) a) American Revolution b) French Revolution c) Great Depression d) Russian Revolution

The classical economists' aggregate supply curve is vertical (LO4) a) both in the short run and in the long run b) in neither the short run nor the long run c) in the short run, but not in the long run d) in the long run, but not in the short run

To end a bad recession, we need to (LO7) a) go to war b) spend a lot of money c) balance the federal budget

Which statement best describes the classical theory of employment? (LO2) a) We will always have a great deal of unemployment. b) We will usually have a great deal of unemployment. c) We will occasionally have some unemployment, but our economy will automatically move back toward full employment. d) We never have any unemployment.

Keynes considered full-employment GDP to be (LO5, 6) a) the normal state of economic affairs b) a rare occurrence c) an impossibility d) none of these

Keynes was concerned mainly with \((\mathrm{LO4}, 5)\) a) aggregate supply b) aggregate demand c) the interest rate d) inflation

When aggregate demand is greater than aggregate supply, (LO4) a) inventories get depleted and output rises b) inventories get depleted and output falls c) inventories rise and output rises d) inventories rise and output falls

When the economy is in disequilibrium, (LO4) a) production automatically rises b) production automatically falls c) it automatically moves back into equilibrium d) it stays in disequilibrium permanently

As the price level rises, (LO4) a) the quantity of goods and services demanded falls b) the quantity of goods and services demanded rises c) the quantity of goods and services demanded stays the same d) none of the above is correct

The slope of the aggregate demand curve is explained by each of the following except \((\mathrm{LO} 3,4)\) a) the real balance effect b) the interest rate effect c) the foreign purchases effect d) the profit effect