Answer to Question #199286 in Macroeconomics for KHOVIN RAJ A/L SEL

Question

Which of the following is not true of the Keynesian model?

Select one:

A. The wage bargain is struck in terms of money wages.

B. An increase in the expected price level would cause labour supply to decline.

C. Imperfect information about prices explains fluctuations in output and employment.

D. Price expectations are essentially forward-looking.

E. An increase in the money wage for a given value of the expected price level would increase labour supply.

Which of the following statement is not true?

Select one:

A. If money demand is completely interest insensitive, the LM curve is vertical.

B. An increase in money demand for speculation shifts the LM schedule to the left.

C. In the liquidity trap situation, increments to wealth would be held in the form of money.

D. Keynes assumes that investors have a relatively fixed conception of the critical interest. rates

E. A shift in the money demand function is also known as a shift in liquidity preference.

Answer 1

(i)

the correct answer is E. An increase in the money wage for a given value of the expected price level would increase labour supply.

explanation

If the wage rate rises, employers will want to hire fewer employees. The quantity of labor demanded will fall, and there will be a movement upward along the demand curve. If the wages and salaries fall, employers are more likely to hire a larger number of workers. The quantity of labor demanded will rises, resulting in a downward movement along the DD curve.

(ii)

the correct answer is B. An increase in money demand for speculation shifts the LM schedule to the left.

explanation

Because Rise in autonomous money demand will shift the LM curve to the left not the increase in money demand.