Econ 231 exam 3 COMPLETE EXAM Questions and Answers (Verified
Answers) (Latest Update 2026) UPDATE!!
Consumption, investment, government spending, exports, and imports are: - (ANSWER)all components
of aggregate demand
Keynesian economics focuses on explaining why recessions and depressions occur, as well as offering a
______________________ for minimizing their effects. - (ANSWER)policy presciption
Aggregate demand is more likely _________________ than aggregate supply in the short run. -
(ANSWER)the shift substantially
In the Keynesian framework, ____________________ will not cause a shift of the Aggregate Supply
curve. - (ANSWER)changes in output prices
A key assumption of the Keynesian economic framework is that: - (ANSWER)prices and wages are sticky
According to the _____________________ argument, a market-oriented economy has no obvious way to
implement a plan of systematic wage reductions. - (ANSWER)coordination
According to macroeconomic theory, evidence that high unemployment may be accompanied by low
inflation, and low unemployment may be accompanied by high inflation supported by the: -
(ANSWER)Keynesian Phillips curve tradeoff
. The neoclassical perspective on macroeconomics emphasizes that in the long run, the economy seems
to rebound back to its _____________ and its______________. - (ANSWER)potential GDP, natural rate of
unemployment
Which of the following is a building block of neoclassical economics? - (ANSWER)Wages and prices will
adjust in a flexible manner.
Which of the following government policies would be supported by neoclassical assumptions? -
(ANSWER)Focus on long-term growth and on controlling inflation.
, Econ 231 exam 3 COMPLETE EXAM Questions and Answers (Verified
Answers) (Latest Update 2026) UPDATE!!
Which of the following represents the Keynesian point of view of macroeconomics? - (ANSWER)Creating
increases in Aggregate Demand to reduce unemployment.
Which of the following is a distinguishing characteristic of the neoclassical view? - (ANSWER)Flexibility of
wages and prices over time
Over the long run, a surge in aggregate demand from a neoclassical perspective will most likely result in -
(ANSWER)an increase in the price level
If a neoclassical model shows increasing wages in the economy over the long run, what else will likely
occur? - (ANSWER)Inflationary increase in price level
Which of the following is a valid criticism of the rational expectations theory? - (ANSWER)The
assumption seems too strong
In the neoclassical view, changes in ____________________ can only have a short-term impact on
output and on unemployment. - (ANSWER)aggregate demand
The theory of _____________________ holds that people will use all information available to them to
form the most accurate expectations about the future. - (ANSWER)rational expectations
From a neoclassical view, which of the following is less important? - (ANSWER)Fighting unemployment
The shape of the ______________ involves a tradeoff between unemployment and inflation. -
(ANSWER)Phillips curve
Using the neoclassical model, what will the level of cyclical unemployment be when an economy is
producing at potential GDP? - (ANSWER)Zero
Answers) (Latest Update 2026) UPDATE!!
Consumption, investment, government spending, exports, and imports are: - (ANSWER)all components
of aggregate demand
Keynesian economics focuses on explaining why recessions and depressions occur, as well as offering a
______________________ for minimizing their effects. - (ANSWER)policy presciption
Aggregate demand is more likely _________________ than aggregate supply in the short run. -
(ANSWER)the shift substantially
In the Keynesian framework, ____________________ will not cause a shift of the Aggregate Supply
curve. - (ANSWER)changes in output prices
A key assumption of the Keynesian economic framework is that: - (ANSWER)prices and wages are sticky
According to the _____________________ argument, a market-oriented economy has no obvious way to
implement a plan of systematic wage reductions. - (ANSWER)coordination
According to macroeconomic theory, evidence that high unemployment may be accompanied by low
inflation, and low unemployment may be accompanied by high inflation supported by the: -
(ANSWER)Keynesian Phillips curve tradeoff
. The neoclassical perspective on macroeconomics emphasizes that in the long run, the economy seems
to rebound back to its _____________ and its______________. - (ANSWER)potential GDP, natural rate of
unemployment
Which of the following is a building block of neoclassical economics? - (ANSWER)Wages and prices will
adjust in a flexible manner.
Which of the following government policies would be supported by neoclassical assumptions? -
(ANSWER)Focus on long-term growth and on controlling inflation.
, Econ 231 exam 3 COMPLETE EXAM Questions and Answers (Verified
Answers) (Latest Update 2026) UPDATE!!
Which of the following represents the Keynesian point of view of macroeconomics? - (ANSWER)Creating
increases in Aggregate Demand to reduce unemployment.
Which of the following is a distinguishing characteristic of the neoclassical view? - (ANSWER)Flexibility of
wages and prices over time
Over the long run, a surge in aggregate demand from a neoclassical perspective will most likely result in -
(ANSWER)an increase in the price level
If a neoclassical model shows increasing wages in the economy over the long run, what else will likely
occur? - (ANSWER)Inflationary increase in price level
Which of the following is a valid criticism of the rational expectations theory? - (ANSWER)The
assumption seems too strong
In the neoclassical view, changes in ____________________ can only have a short-term impact on
output and on unemployment. - (ANSWER)aggregate demand
The theory of _____________________ holds that people will use all information available to them to
form the most accurate expectations about the future. - (ANSWER)rational expectations
From a neoclassical view, which of the following is less important? - (ANSWER)Fighting unemployment
The shape of the ______________ involves a tradeoff between unemployment and inflation. -
(ANSWER)Phillips curve
Using the neoclassical model, what will the level of cyclical unemployment be when an economy is
producing at potential GDP? - (ANSWER)Zero
