1- Analysis of the short and long runs indicates that the ______ assumptions are most appropriate in ______.

a. classical; both the short and long runs.

b. Keynesian; both the short and long runs.

c. classical; the short run, whereas the Keynesian assumptions are most appropriate in the long run.

d. Keynesian; the short run, whereas the classical assumptions are most appropriate in the long run.

2- The U.S. recession of 2001 can be explained in part by a declining stock market and terrorist attacks. Both of these shocks can be represented in the IS–LM model by shifting the ______ curve to the ______.

a. LM; right b. LM; left c. IS; right d. IS; left

3- The production function y = f(k) means:

a. labor is not a factor of production.

b. output per worker is a function of labor productivity.

c. output per worker is a function of capital per worker.

d. the production function exhibits increasing returns to scale.

4- In the Solow growth model, with a given production function, depreciation rate, no technological change, and no population growth, a higher saving rate produces a:

a. higher MPK in the new steady state.

b. higher steady-state growth rate of output per worker.

c. higher steady-state growth rate of total output.

d. higher steady-state level of output per worker

5- The IS–LM model is generally used:

a. only in the short run. b. only in the long run. c. both in the short run and the long run. d. in determining the price level.

6- An IS curve shows combinations of:

a. taxes and government spending.

b. nominal money balances and price levels.

c. interest rates and income that bring equilibrium in the market for real balances.

d. interest rates and income that bring equilibrium in the market for goods and services.

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The detailed answer for the above question is provided below Option d Keynesian the short run wherea... View the full answer