structural factors in labor markets

Question 1

Keynes believed that persistent unemployment during a recession was a result of

Question 1 options:
• the control that large firms exerted on the economy
• the greed that is inherent in the capitalistic system
• a real wage that was too high
• structural factors in labor markets
Question 2

One definition of demand is that demand is a schedule that shows the quantity of output that buyers are willing and able to purchase at various prices. The relationship of the IS curve to this definition is that

Question 2 options:
• IS shows the ability to buy real GDP
• IS is the demand curve in the IS-LM model
• IS shows the willingness to purchase GDP
• IS shows the equilibrium combination of output and prices
Question 3

The IS-LM analysis with real interest rates along the Y axis and real GDP on the X axis assumes that

Question 3 options:
• Aggregate supply is positively sloped in the Price-Quantity plane
• Aggregate supply is fixed at a given price level
• Aggregate supply creates its own aggregate demand
• Aggregate supply is fixed at given level of output

Question 4

The intersection of the IS and LM curves

Question 4 options:
• may show disequilibrium levels of aggregate output
• may show real GDP with some workers unemployed
• may show prices that are greater than wages
• may show disequilibrium real interest rates
Question 5

In Keynesian monetary theory

Question 5 options:
• the velocity of money can vary
• investment spending is stable
• the velocity of money is stable
• consumption spending is volatile
Question 6

The intercept term for the IS curve has all of the following except

Question 6 options:
• autonomous investment
• interest rate sensitivity of investment
• real GDP
• government spending
Question 7

The intercept term of the LM curve has all of the following except

Question 7 options:
• autonomous money demand
• money supply
• the real interest rate
• interest rate sensitivity of money demand
Question 8

One definition of demand is that demand is a schedule that shows the quantity of output that buyers are willing and able to purchase at various prices. The relationship of the LM curve to this definition is that

Question 8 options:
• LM shows the ability to buy aggregate output
• LM is the supply curve that intersects the demand curve shown by IS
• LM shows an equilibrium combination of prices and output from the perspective of money markets
• LM shows the willingness to buy aggregate output
Question 9

When the interest rate sensitivity of money demand is zero, the multiplier for monetary policy reduces to one divided by the transactions parameter. This is also

Question 9 options:
• the money multiplier
• the autonomous expenditure multiplier
• the velocity of money
• the speculative demand for money
Question 10

A flat IS curve and steep LM curve favor _____

Question 10 options:
• interventionist economic policy
• monetary policy
• fiscal policy
• non-interventionist economic policy

Question 11

IS-LM analysis provides a macroeconomic model of

Question 11 options:
• demand and supply
• allocation in resource markets
• demand
• supply
Question 12

A positively sloped LM curve

Question 12 options:
• is a necessary condition for Keynesian policy conclusions to be valid.
• indicates the interest rate sensitivity of investment demand is close to zero.
• is not a primary requirement for Keynesian analysis to be valid.
• indicates that the interest rate sensitivity of money demand is close to zero.
Question 13

Aggregate demand is derived in the IS-LM model by

Question 13 options:
• shifting IS curve through price changes
• changing the slope of the LM curve
• shifting the LM curve through price changes
• changing the slope of the IS curve
Question 14

The intersection of Aggregate Demand and Aggregate Supply in Keynesian analysis is an equilibrium

Question 14 options:
• that shows full-employment production of real GDP
• that may occur even when there is significant unemployment
• that demonstrates the general validity of Say’s Law
• that can only exist in an economy with full and relevant information
Question 15

Fiscal policy is effective when

Question 15 options:
• the interest rate sensitivity of money demand is high
• the interest rate sensitivity investment demand is high
• the interest rate sensitivity investment demand is low
• the interest rate sensitivity money demand is low

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