1  Keynesians believe consumer demand is the primary driving force in an economy. A) it explains why a large change in autonomous spending has such a small impact on equilibrium output. A. Keynesian Theory . West Yorkshire, color:#000!important; Oligopoly. 3Galbraith (2010) 63. Reach the audience you really want to apply for your teaching vacancy by posting directly to our website and related social media audiences. Missed a question here and there? 9 Multiple Choice Questions (MCQs) with Answer on “Macroeconomics” Article shared by (a) The book “General Theory of Employment, Interest and Money” was written by: (i) Alfred Marshall (ii) Prof. J. M. Keynes. B) consumer expenditure, planned investment spending, and government spending. Keynesian economics suggests governments need to use fiscal policy, especially in a recession. C) increase by an amount greater than the change in investment spending. 7) Actual investment spending is comprised of two components: 8) In the Keynesian framework, as long as output is _____ the equilibrium level, unplanned inventory investment will remain _____ and firms will continue to raise production. The perfectly elastic shape of the Keynesian AS curve shows the existence of excess capacity allowing real GDP to expand through increases in aggregate demand without there being inflation. 6Ibid 4. The Indifference curve approach was introduced by a) Alfred Marshall b) Lionel Robbins c) J.R. Hicks and R.G.D. 214 High Street, D) consumer expenditure, planned investment spending, government spending, and net exports. The idea comes from the boom-and-bust economic cycles that can be expected from free-market economies B. (b) a decline in the real money supply, a decline in interest rates, an increase in investment Governments and Resource Allocation. Multiple Choice Questions. MCQ Questions for Class 12 Economics Chapter 10 Determination of Income and Employment with Answers December 17, 2020 by Kishen Leave a Comment Determination of Income and Employment Class 12 MCQs Questions with Answers B) planned investment and fixed investment. The first National Income calculation on a scientific basis in India is in the year A. In Keynesian economics, demand is crucial—and often erratic. A) increase by an amount equal to the change in investment spending. 3) If aggregate expenditure exceeds aggregate output, there will be unplanned inventory _____ causing output to _____. The effects of income and interest rates on consumption would be stressed and adding the LM schedule would complete the model. color: #000; #mc_embed_signup option { Caroline (Parent of Student), /* footer mailchimp */ #mc_embed_signup input#mce-EMAIL { Sticky wages and nominal wage rigidity was an important concept in J.M. According to Keynes interest is a payment for the use of money. B) Keynes recognized that equilibrium would occur in the economy when total quantity of output supplied (aggregate output produced, Y) equals quantity of output demanded (Y. In the Keynesian economic model, total spending determines all economic outcomes, from production to employment rate. C) Keynes’s analysis involves explaining why aggregate output is at a certain level by understanding what factors affect each component of aggregate demand and how the sum of these components could add up to an output smaller than the economy is capable of producing, resulting in less than full employment. Government borrowing is cheap but not without risks, How migration could make the world grow richer, Poor management cited as a key supply-side weakness for the UK. A) the change in equilibrium output to a change in the monetary base. } D) the high unemployment in Great Britain after World War II. What Is Keynesian Economics? [94] [95] Today these ideas, regardless of provenance, are referred to in academia under the rubric of "Keynesian economics", due to Keynes's role in consolidating, elaborating, and popularizing them. #mc_embed_signup{background:#292929!important; clear:left; } A) business firms will cut production to keep from accumulating inventories. Question 1. MULTIPLE CHOICE QUESTIONS CONSUMPTION 1. D) business firms will expand production to build up inventories. New Classical Theory. Multiple Choice Questions, M.B.B U, Semester –III Pass 1. } B) business firms will expand production to keep from accumulating inventories. B) it explains why a small change in autonomous spending can have a large impact on equilibrium output. Post-Keynesian economics (PKE) is an economic paradigm that stems from the work of economists such as John Maynard Keynes (1883-1946), Michal Kalecki (1899-1970), Roy Harrod (1900-1978), Joan Robinson (1903-1983), Nicholas Kaldor (1908-1986), and many others. In the domestic economy there are three elements of demand identified by macroeconomic theory: consumption (represented by the letter “C”), private investment (I) and government spending (G). Susie (Student), "We have found your website and the people we have contacted to be incredibly helpful and it is very much appreciated." Students are advised to go through these MCQ’s time and again in order to have a complete grasp of the topics of their syllabus. He has over twenty years experience as Head of Economics at leading schools. A. Keynesian Theory. In particular, Keynes argued in a recession, with falling prices, wages didn’t fall to restore equilibrium. Keynes The General Theory of Employment, Interest and Money. Classical economics places little emphasis on the use of fiscal policy to manage aggregate demand. NNP means A) GDP – depreciation B. GDP + depreciation C. NNP – depreciation D. GNP – depreciation 3. The equation found in economic texts round the world is that output equals the total of C+I+G. Boston House, whole‟.7 Keynes‟ theory became, for a time, the new economic orthodoxy and profoundly affected government economic policy, including tax policy, 1Keynes (1998) 372. }

Fax: +44 01937 842110, We’re proud to sponsor TABS Cricket Club, Harrogate Town AFC and the Wetherby Junior Cricket League as part of our commitment to invest in the local community, Company Reg no: 04489574 | VAT reg no 816865400, © Copyright 2018 |Privacy & cookies|Terms of use, Revision Activities: MCQ Questions - Answers Explained, AD-AS Analysis: Currencies and Oil Prices, Short Run Aggregate Supply - Revision Playlist, Factors that can cause a change in aggregate demand, Minimum Wage - A Level Economics Data Response Plan, Infrastructure and Long Run Aggregate Supply, Economics of the Crisis - Policies to avoid a Depression [Head Start in A-Level Economics], Demand-side Macro Policies (Quizlet Activities), Corporation Tax and Aggregate Demand & Supply, Aggregate Demand and Aggregate Supply - Clear The Deck Key Term Knowledge Activity, Coronavirus update: Supply shocks and risks of economic scarring. All students preparing for mock exams, other assessments and the summer exams for A-Level Economics. B) the change in the money supply to a change in the monetary base. ADVERTISEMENTS: (ii) Bounding (iv) David Ricardo. This question looks at the effects of an outward shift of aggregate demand using the Keynesian aggregate supply curve model. color: #000!important; A) inflation was not a serious problem during the Great Depression. In the ‘Keynesian Consumption Function’ the average propensity to consume (apc) falls as disposable income increases and the marginal propensity to consume (mpc) is less than one. A) Keynes’s analysis started with the recognition that the total quantity demanded of an economy’s output was the sum of four types of spending: consumer expenditure, planned investment spending, government spending, and net exports. Keynesian economics is a macroeconomic economic theory of total spending in the economy and its effects on output, employment, and inflation. Keynes, General Theory of Employment, Interest and Money, page 25 . Thus, while the availability of the factors of production determines a nation’s potential GDP, the amount of goods and services actually being sold, known as real GDP, depends on how much demand exists across the economy. Chapter 12. 2Ibid xxi. 14) The multiplier concept is important in the Keynesian model because, 15) Like the simplified Keynesian model, the full Keynesian ISLM model, /* footer mailchimp */ Chapter 09. Answer: Option A. 2) If aggregate demand falls short of current output. Much cheaper & more effective than TES or the Guardian. Chapter 11. Keynes’ theory based on Liquidity preference is called monetary theory of the rate of interest as against the classical real theory of rate of interest. Multiple Choice Test: Aggregate Demand in the Keynesian System, 1) Keynes’s motivation in developing the aggregate output determination model stemmed from his concern with explaining. C) assumes that interest rates are fixed. Infrastructure - Why is China so good at building railways? Introducing the Theory of the Firm. D) decrease by an amount less than the change in investment spending. The value of MPC allows us to calculate the size of the multiplier using the formula: 1 / (1 – MPC) = 1 / (1 – 0.5) = 2. MCQ based on Semester 4 - EC4CRT05 Macro Economics I 1. }

It is an excellent basis for my revision." It is defined by the view that the principle of effective demand as developed by J. M. Keynes in the General Theory(1936) and M. Kalecki (1933) holds in the short, as well as in the long run. “Rest of the world” is the major element in A. A) fixed investment and actual inventory investment. Chapter 13. } Marginal revenue is the latest addition made to the a) average revenue b) Total production c) Total revenue d) none Ans (c ) 3. C) consumer expenditure, actual investment spending, government spending, and net exports. A) lower; fall B) lower; rise C) raise; fall D) raise; rise. B. Keynesian Aggregate Supply (MCQ Revision Question) The perfectly elastic shape of the Keynesian AS curve shows the existence of excess capacity allowing real GDP to expand through increases in aggregate demand without there being inflation. He writes extensively and is a contributor and presenter on CPD conferences in the UK and overseas. 9) In the Keynesian framework, as long as output is below the equilibrium level, unplanned inventory investment will remain negative, firms will continue to _____ production, and output will continue to _____. Boston Spa, 1951-52 C. 1931-32 D. 1990-91 2. In the 1930s, the great depression saw a … Here is the fundamental error of Keynesian economics. 7Ibid xxii. Wonderful footage of Keynes discussing the Gold Standard! That is, that economic activity in a capitalist moneta… Sam (Student), "Wow! As a result, the theory supports the expansionary fiscal policy. color:#000!important; 16. Keynes pointed to factors such as aversion to nominal wage cuts. Chapter 10. color: #000; Chapter 14. D) the change in equilibrium output to a change in the autonomous expenditure. 4) The expenditure multiplier is the ratio of, 5) In a closed economy, aggregate demand is the sum of, 6) In the Keynesian model of income determination, consumer expenditure includes spending by. 4Ibid 70. Keynes's General Theory tops ranking of most influential scholarly books, Eighty Years on from the General Theory - Keynes Returns, Google's £1bn Investment in the UK Economy, 70th Anniversary of the death of John Maynard Keynes, Multiplier Effect - Revision and Practice Questions, AQA A-Level Economics Study Companion - Macroeconomics, Edexcel A-Level Economics Study Companion for Theme 4, Advertise your teaching jobs with tutor2u. Keynesian economics gets its name, theories, and prin- ciples from British economist John Maynard Keynes (1883–1946), who is regarded as the founder of modern macroeconomics. View Answer. B) why the Great Depression occurred. Is the UK sleep-walking into an unemployment crisis? 5Keynes (1998) 3. This led to real wage unemployment. Two sector model B. Monopoly and Monopolistic Competition. Athens Journal of Law January 2015 35 especially in the post-World War 2 period, in the Western World. 1947-48 B. Every able bodied person who is willing to work at the prevailing wage rate is employed called as – (a) Full employment (b) Under employment (c) Unemployment (d) Employment opportunity Answer: (a) Full employment. Quoted by Keynes. The Keynesian perspective focuses on aggregate demand. 13) There are two types of investment: _____ investment–the spending by business firms on equipment and structures, and planned spending on residential houses–and _____ investment–spending by business firms on additional holdings of raw materials, parts, and finished goods. A) accumulation; increase B) accumulation; decrease, C) depletion; decrease D) depletion; increase. Economics MCQs. C) the change in the money supply to a change in the autonomous expenditure. C) his primary focus was on interest rates and investment spending. MCQ Questions for Class 12 Economics with Answers were prepared based on the latest exam pattern. C) it is crucial to understanding why changes in investment spending are viewed as the root cause of business cycles fluctuations. #mc_embed_signup .footer-6 .widget input#mce-EMAIL { #mc_embed_signup .footer-6 .widget option { Related Readings. Markets for Labour. 17. Thanks very much for this help. B) increase by an amount less than the change in investment spending. A) examines an equilibrium in which aggregate output produced (Y) equals aggregate demand (Y. The idea is simple: firms produce output only if they expect it to sell. Keynesian economics is a theory that says the government should increase demand to boost growth.

#mc_embed_signup .mc-field-group select { Perfect Competition. color: #000!important; Question 2. C. the economy to grow at a rapid rate during the 1950s. Which of the following statement is inconsistent with Say’s Law (a) The economy has flexible wages and prices. Prior to Keynes, economists generally believed that the invisible hand of the market can direct the economy to its full potential. 6 Aggregate Demand (Keynesian Model) This exercise is based on the following source: Stephen Dobson and Susan Palfreman: Introduction to Economics, Oxford University Press, Oxford / New York 1999, ISBN 978-0-19-877565-2, pp. D) fixed business investment and fixed housing investment. Structural unemployment is a feature in a – (a) Static society (b) Socialist society (c) Dynamic society (d) Mixed … B) his primary focus was on output and employment. B. Costs and Production Methods. 1) To determine the correct level of GNP (Gross national product), it is necessary to: (A) Add up the values of goods and services during one year (B) Add up all savings (C) Count all imports (D) Add up the value of semi-finished goods. Multiple Choice Test: Aggregate Demand in the Keynesian System 1) Keynes’s motivation in developing the aggregate output determination model stemmed from his concern with explaining A) the hyperinflations of the 1920s. His most famous work, The General Theory of Employment, Interest and Money, was pub- lished in 1936. 11) Which of the following statements concerning Keynesian analysis are true? The present MCQ’s are very helpful in understanding the various terminologies used in the relevant chapters of course books of economics. 2) GNP is always (A) Less than NNP (B) Greater than NNP (C) Equal to NNP (D) None of these. Chapter 15. 12) Keynes assumed that the price level was fixed because. A Keynesian economist thinks about consumption theory in terms of private domestic behavioural relations underlying the IS schedule. Christmas 2020 last order dates and office arrangements Zero interest rates and slow growth - Keynes got there before us! Monetarists believe the government should increase the money supply 3 to 5 percent a year and do no more. Classical theory is the basis for Monetarism, which only concentrates on managing the money supply, through monetary policy. Simply put, Keynesians believe that aggregate demand is the key player in macroeconomic issues such as unemployment. 10) An increase in planned investment spending causes aggregate output to. This means that every $1 of new income will generate $2 of extra income. Government, Monopolies, and Oligopolies. Keynesian economics argues that the driving force of an economy is aggregate demand—the total spending for goods and services by the private sector and government. The Keynesian Theory states that an increase in production leads to an increase in the level of income and therefore, an increase in spending. New Classical Theory. D) all of the above since computers are consumer durables. Geoff Riley FRSA has been teaching Economics for over thirty years. Its main tools are government spending on infrastructure, unemployment benefits, and education. Keynesian Economic Theory is an economic school of thought that broadly states that government intervention is needed to help economies emerge out of recession.

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