CHAPTER 13: Keynesian vs. Neoclassical Economics

The Keynesian view of economics assumes that:

In the neoclassical view, changes in ____________________ can only have a short-run impact on output and on unemployment.

From a neoclassical perspective, which of the following would most likely be viewed as an element that underpins long-run productivity growth in the economy?

________________ economists place an emphasis on __________ run economic performance.

Which of the following is most strongly supported by the Keynesian perspective of macroeconomics?

Why do neoclassical economists tend to put relatively more emphasis on long-term growth than on fighting recessions?

In the neoclassical view, the economy has a _______________ to move back to potential GDP.

If aggregate supply is vertical, then aggregate demand does not affect:

If a neoclassical model shows increasing wages in the economy over the long run, what else will likely occur?

A vertical aggregate supply curve, where the quantity of output is consistent with many different price levels, also implies:

Referring to a Keynesian or short-run Phillips curve, a reduction in inflation is likely to cause:

A vertical AS curve means that the level of aggregate supply (or potential GDP) will determine the real GDP of the economy, regardless of the level of:

In the long-run neoclassical view, when wages and prices are flexible, ________________________ determine the size of real GDP.

The neoclassical view holds that long-term expansion of potential GDP due to _______________________ will determine ____________________.

In the neoclassical model, the AS curve shifts to the right over time as_______________________ and potential GDP expands.

From a neoclassical view, which of the following is a true statement?

If an economy experiences a decrease in aggregate demand due to a decline in consumer confidence and output falls below potential GDP, which of the following is likely to occur in the short run?

The neoclassical perspective on macroeconomics emphasizes that in the long run, the economy seems to rebound back to its _____________ and its ____________________.

At a macroeconomic level, the theory of rational expectations points out that if the ______________________ is vertical over time, then people should rationally expect this pattern.

The theory of _____________________ holds that people will use all information available to them to form the most accurate possible expectations about the future.

The shape of the ______________ involves a tradeoff between unemployment and inflation.

Which of the following is a building block of neoclassical economics?

Which of the following is a distinguishing characteristic of the neoclassical view?

Suppose that a rise in business confidence has led to more investment in the economy and higher levels of output. In the short-run Keynesian analysis, the rise in aggregate demand will:

A typical neoclassical aggregate supply (AS) curve ______________ and a typical neoclassical Phillips curve __________________.

When a shift in ________________ occurs, rational expectations hold that its impact on output and employment will only be temporary.

A typical Keynesian aggregate supply (AS) curve _______________ and a typical Keynesian Phillips curve _____________.

If an economy experiences a decrease in aggregate demand due to a decline in consumer confidence and output falls below potential GDP, which of the following is likely to occur in the long run, according to the neoclassical model?

The ___________________ argument tends to view inflation as a cost that offers no offsetting gains in terms of lower unemployment?

Which of the following represents a Keynesian point of view of macroeconomics?

Which of the following government policies would be supported by neoclassical macroeconomic assumptions?

If aggregate supply is vertical, then which of the following statements must be true?

Using a neoclassical model, what will the level of cyclical unemployment be when an economy is producing at potential GDP?

Which of the following is a valid criticism of the rational expectations theory?

In the neoclassical version of the AD/AS model, which of the following would NOT be true regarding the AS curve?

From a neoclassical viewpoint, government should focus less on:

Suppose that productivity growth in an economy over a two-year period has fallen to less than 2% per year, causing a severe recession. From the neoclassical view, which of the following will be more important in these circumstances?