29) Keynes argued that an economy could be in equilibrium when the economy was 2

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29) Keynes argued that an economy could be in equilibrium when the economy was 29) A) operating either at full productive capacity or at less than full capacity B) operating at maximum potential capacity C) operating with some unutilized productive capacity D) trying to operate at some output level beyond its potential capacity 30) In the simple Keynesian portion of the upward sloping short-run aggregate supply curve A) equilibrium real GDP is supply-determined B) equilibrium real GDP is neither determined by aggregate supply nor by aggregate demand. C) equilibrium real GDP is determined by both aggregate supply and aggregate demand D) equilibrium real GDP is demand-determined. 31) In the Keynesian model which includes the Keynesian short-run aggregate supply curve 31) A) an increase in aggregate demand changes neither the price level nor the level of real GDP B) an increase in aggregate demand would causes the price level to rise, but does not change the level of real GDP C) an increase in aggregate demand causes real GDP to rise without changing the price level. D) an increase in aggregate demand causes real GDP and the price level to decrease 32) Which of the following will NOT shift the short-run aggregate supply (SRAS) curve? 32) A) technological progress C) a change in the wage rate B) a change in the price level D) a reduction in the price of a raw material 33) All of the following will cause the aggregate supply curve to shift to the right EXCEPT 33) A) a reduction in international trade barriers. B) an increase in marginal tax rates. C) a reduction in input prices. D) discoveries of raw materials 34) 34) The gap that exists when equilibrium real Gross Domestic Product (GDP) is greater than full employment real Gross Domestic Product (GDP) is called a(n) A) recessionary gap. C) employment gap. B) demand gap. D) inflationary gap. GDP is less than fall-em 35) 35) The gap that exists when equilbrium real GDP is less than full-employment real GDP is A) money illusion. C) an inflationary gap. B) a recessionary gap. D) the short-run aggregate supply curve 36) 36) An example of an aggregate supply shock is A) the increase in candy sales every February B) the cutoff of oil by the OPEC nations in the early 1970s C) the increase in the labor force due to the baby-boomer generation reaching working age. D) inflation caused by a surge in demand

Explanation / Answer

First question is answered below

1.

Correct option: B

Reason: As per Keynes, when economy is operating at full employment level of output or at maximum potential capability, can it be in long run equilibrium

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