SOLVED

1) John Maynard Keynes ________. A) questioned the classical view that economies move quickly to their long run equilibrium levels B) advocated focusing on short run fluctuations C) carved out macroeconomics as a distinct field in the 1930s D) all of the above E) none of the above 2) The classical view believes that ________. A) economies move slowly to their long run equilibrium levels B) a rise in the quantity of money leads to increases in saving and investment C) a rise in the quantity of money has no impact on economic activity D) all of the above E) none of the above 3) Classical economists believe that ________. A) it takes a long time for economic variables to reach equilibrium B) short-run fluctuations are too infrequent and mild to be of much interest C) real variables like output and investment are not determined by nominal variables D) all of the above E) none of the above 4) Keynesians believe ________. A) that economies move quickly to their long run equilibrium levels B) that the government should pursue active policies to stabilize economic fluctuations C) that the long run is more important than short-run fluctuations D) all of the above E) none of the above 5) According to the flexible price framework ________. A) economic fluctuations determine long-run outcomes B) a change in the money supply has no effect on real output C) a change in inflation alters the amount of real investment D) all of the above E) none of the above 6) According to the flexible price framework ________. A) an increase in inflation raises real savings B) an increase in the money supply raises real output C) an increase in inflation lowers real investment D) all of the above E) none of the above 7) According to the flexible price framework ________. A) aggregate output is determined by the production function with given levels of capital and labor B) the interest rate is solely determined by the interaction of savings and investment C) nominal and real variables are completely independent D) all of the above E) none of the above 8) Keynesian economists ________. A) observe that prices respond slowly to changes in supply and demand B) believe that the classical dichotomy does not hold in the short run C) believe that monetary policy affect aggregate output and the real interest rate D) all of the above E) none of the above 9) Keynesian economists ________. A) believe that the classical dichotomy does not hold in the long run B) believe that only the interaction between savings and investment affects the real interest rate C) observe that prices are “sticky” D) all of the above E) none of the above 10) Keynesian economists ________. A) observe that prices are perfectly flexible B) believe that the classical dichotomy never holds C) believe that only the interaction between savings and investment affects the real interest rate D) all of the above E) none of the above