Economics 201 Study questions
Unit # 3
Chapters 11, 12 and special
topic 5
1)
Use the AD, AS
model to demonstrate the impact of:
a)
an increase in AD, where there is no change in LRAS.
b)
a decrease in AD, where there is no change in LRAS.
2)
What are the
major differences between the Classical and Keynesian views with regards to the
stability of AD, the self-correcting ability of macroeconomic markets and the
role that government should play in correcting and preventing business cycles?
3)
What factors
influence consumption spending in the Keynesian model?
4)
From hypothetical
data, construct a family’s consumption function and show the break-even income
and MPC
5)
Show how changes
in things other than family income affect the location of the consumption
function.
6)
How are “I” and
“G” treated in the Keynesian model?
7)
How is “Xn” treated in the Keynesian model?
8)
Describe the
conditions that exist at equilibrium in the Keynesian model? Develop a graph to show equilibrium. Show the level of unplanned inventory
(investment) that exists at production levels other than equilibrium.
9)
Explain why
leakages equal injections at equilibrium in the Keynesian model.
10)What
is the multiplier? Use the equilibrium graph to show the multiplier effect.
11)Use
an example to describe how the simple multiplier works.
12)Use
an example to describe how the complex multiplier works.
13)Use
the Keynesian graph to show the rounds of the multiplier.
14)How
did Keynes believe fiscal policies should be used?
15)How
did this change conventional thinking?
16)Describe
the elements of an expansionary and a restrictive Keynesian discretionary
fiscal policy. Under what circumstances would Keynes recommend using either
policy?
17)What
are and how do automatic stabilizers work?
18)Why
do supply side economists think that high marginal tax rates retard the growth
of output?
19)Describe
the elements of a supply-side tax reform policy.
20)Describe
the Federal budget situation from 1950 to the present.
21)How
do budget deficits impact the economy and impose a burden on future
generations?