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1. Which economic model posits that government intervention
can lead to a net increase in demand, output, and income during a
recession?
- A) Classical
- B) Keynesian
- C) Monetarist
- D) Supply-side
Correct Answer: B) Keynesian
Rationale: The Keynesian economic model suggests that during
a recession, government intervention in the form of increased
spending and lower taxes can stimulate demand, leading to
increased output and income.
2. In the context of the IS-LM model, an increase in government
spending would generally result in:
- A) A shift of the IS curve to the right
- B) A shift of the IS curve to the left
- C) A movement along the IS curve
- D) No shift in the IS curve
Correct Answer: A) A shift of the IS curve to the right
Rationale: In the IS-LM model, increased government spending
shifts the IS curve to the right, indicating higher levels of income
and output at each interest rate.
ECS2602 Intermediate Macroeconomics Comprehensive Final Exam Review Q & A Complete And Study material 29pages LEARNEXAMS
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