Question

4)If the economy is at full employment, a rise in net exports causes:

A) An increase in RGDP, no change in price in the AD/AS graph.

B) Increase in prices in the AD/AS model with no change in the Keynesian model

C) Increase in price, no change in RGDP in the Keynesian model

D)Increase in RGDP and price level in both models.

E) Increases RGDP and prices in Keynesian

5) What describes the difference between Keynesian and classical thinking?

A) Classicalists think wages are inflexible down, Keynesians think that unemployment can be eliminated by wage decreases.

B) Classicalists think that economy can go towards full employment equilibirum, while Keynes thinks equilibrium output less than full employment is possible.

C) Classicalists think prices are not flexible, while Keynes thinks they are flexible.

D_ Classicalists think government intervention is necessary, while Keynes didn't think it was.

E) Classicalists think savings depen on disposable income, while Keynes thinks savings depends on interest rates.

6)The Keynesian model can be used when the economy has/is:

A) Low employment

B) Flexible prices

C) Full employment

D) Flexible wages

E) Below full-employment.

7) True or false- In the Keynesian model, the initial state of the economy doesn't matter when something changes. Predictions will still be the same. However, in the AD/AS model, it matters because the predictions are different for full employment economy than for a economy below full employment.

A) True

B)False

8)The AD/AS models say that prices:

A) Can cause changes to the equilibrium of production.

B) Fixed

C) Automatically adjust

D) Not important when determining equil.

E) Sticky

9) The ______ part of the AS curve is in line with the Keynesian theory

A) steep

B)flat

C) sloping upward

D) Entire

E) Nothing in the AS curve does this.

Answer 1

4) The answer is D) Increase in Real GDP and price level in both models.

because in both model AD and AS model and Keynesian model , an increase in the net exports cause to increase in the aggregate demand for the economy and aggregate demand curve shifts rightward causing increase in price level and real GDP.