Sophisticated Political Economy Keynesian Economics Test - 79+ MCQs: Political Economy - Keynesian Economics Quiz: Test Your Knowledge with Political Science Questions and Answers - Political Economy Keynesian Economics Test

1. What is the relationship between Keynesian economics and public policy?

Keynesian economics provides a framework for guiding public policy decisions

Keynesian economics discourages government intervention

Keynesian economics has no impact on public policy

Keynesian economics promotes income inequality

2. What is the concept of 'comparative advantage' in international trade according to Keynesian economics?

The ability of a country to produce a good or service at a lower opportunity cost than other countries

The impact of changes in interest rates on investment

The effect of changes in consumer confidence on aggregate demand

The influence of changes in exchange rates on international trade

3. What is the concept of the Phillips curve in Keynesian economics?

The relationship between inflation and unemployment

The relationship between interest rates and investment

The relationship between government spending and economic growth

The relationship between taxes and consumer spending

4. What are animal spirits in Keynesian economics?

Psychological factors that influence economic decisions and behavior

Government regulations that promote competition and market efficiency

Government programs that provide income support to the unemployed

Government interventions to control inflation and maintain price stability

5. Who is considered the founder of Keynesian economics?

John Maynard Keynes

Adam Smith

Milton Friedman

Karl Marx

6. According to Keynesian economics, what is the primary driver of economic activity?

Consumer spending

Investment

Government spending

Exports

7. What is the concept of 'liquidity trap' in Keynesian economics?

A situation where interest rates are very low and monetary policy becomes ineffective

A condition of high inflation and stagnant economic growth

A state of economic recession with high unemployment rates

A scenario where government spending exceeds tax revenue

8. What is the role of automatic stabilizers in Keynesian economics?

To automatically stabilize the economy during economic fluctuations without explicit government intervention

To minimize government intervention in the economy

To solely rely on market forces for economic stabilization

To regulate international trade for economic stability

9. What are austerity measures in Keynesian economics?

Government policies aimed at reducing budget deficits and public debt

Government interventions to stimulate economic growth and increase aggregate demand

Government regulations that promote competition and market efficiency

Government programs that provide income support to the unemployed

10. What is the main goal of fiscal policy in Keynesian economics?

Stabilizing the economy through government spending and taxation

Controlling inflation through monetary policy

Promoting economic growth through deregulation

Encouraging international trade through tariffs

11. What is the concept of the liquidity preference theory in Keynesian economics?

The theory that individuals prefer to hold money rather than other assets

The theory that individuals prefer to hold assets rather than money

The theory that individuals prefer to hold foreign currency rather than domestic currency

The theory that individuals prefer to hold stocks rather than bonds

12. What is the role of money supply in Keynesian economics?

To influence aggregate demand and inflation

To regulate markets and promote competition

To provide public goods and services

To maintain price stability and control inflation

13. Which of the following is a key component of fiscal policy in Keynesian economics?

Interest rate adjustments

Tax cuts

Money supply control

Exchange rate manipulation

14. What is the concept of the marginal propensity to save in Keynesian economics?

The proportion of additional income that is spent on consumption

The proportion of additional income that is saved

The proportion of additional income that is invested

The proportion of additional income that is taxed

15. What is the Keynesian Cross in macroeconomics?

A graphical representation of the relationship between aggregate demand and national income

A model that shows the relationship between interest rates and investment

A theory that explains the relationship between inflation and unemployment

A concept that describes the impact of government spending on economic growth

16. What is the role of government deficits in Keynesian economics?

To stimulate economic growth during recessions

To control inflation

To reduce income inequality

To promote international trade

17. What is the role of international trade in Keynesian economics?

To promote economic growth and specialization

To control inflation

To reduce income inequality

To solely rely on domestic production

18. What is the liquidity trap in Keynesian economics?

A situation where interest rates are very high

A situation where interest rates are very low

A situation where inflation is high

A situation where inflation is low

19. What is the Phillips curve in Keynesian economics?

A graphical representation of the inverse relationship between unemployment and inflation

A measure of income inequality in an economy

A theory of international trade

A model of economic growth

20. What is crowding out in Keynesian economics?

The decrease in private investment due to increased government borrowing

The increase in consumer spending due to tax cuts

The expansion of money supply by the central bank

The decrease in government spending due to budget constraints

21. What is the role of government in Keynesian economics?

To actively intervene in the economy

To minimize its intervention in the economy

To solely rely on market forces

To regulate international trade

22. What is the role of economic growth in Keynesian economics?

To promote income inequality

To increase government intervention

To reduce aggregate demand

To improve living standards

23. What is the concept of aggregate demand in Keynesian economics?

The total demand for goods and services in an economy

The total supply of goods and services in an economy

The total investment in an economy

The total savings in an economy

24. What is the role of government intervention in Keynesian economics?

To promote free market principles

To regulate interest rates

To manage aggregate demand and stabilize the economy

To reduce income inequality

25. What is the concept of the multiplier accelerator model in Keynesian economics?

The relationship between government spending and economic growth

The relationship between interest rates and investment

The relationship between taxes and consumer spending

The relationship between investment and economic growth

26. What is the concept of 'paradox of thrift' in Keynesian economics?

The idea that individual saving can lead to a decrease in overall economic output

The tendency of consumers to spend more during economic downturns

The impact of changes in interest rates on investment

The effect of changes in consumer confidence on aggregate demand

27. What is the concept of the marginal propensity to consume in Keynesian economics?

The proportion of additional income that is spent on consumption

The proportion of additional income that is saved

The proportion of additional income that is invested

The proportion of additional income that is taxed

28. What is the role of taxation in Keynesian economics?

To influence consumer spending and redistribute income

To regulate markets and promote competition

To provide public goods and services

To maintain price stability and control inflation

29. What is supply-side economics in Keynesian theory?

An approach that focuses on reducing government spending and lowering taxes

An approach that emphasizes demand-side policies to boost consumer spending

An approach that advocates for government intervention to regulate markets

An approach that promotes international trade and globalization

30. What is the role of income distribution in Keynesian economics?

To reduce income inequality through progressive taxation and social welfare programs

To promote income inequality as an incentive for economic growth

To solely rely on market forces for income distribution

To regulate international trade for fair income distribution

31. What is demand-side economics in Keynesian theory?

An approach that focuses on increasing aggregate demand to stimulate economic growth

An approach that emphasizes supply-side policies to boost productivity

An approach that advocates for free markets and limited government intervention

An approach that promotes international trade and globalization

32. What is the role of monetary policy in Keynesian economics?

To influence borrowing, spending, and investment through manipulation of interest rates

To increase government spending to stimulate economic growth

To reduce income inequality through progressive taxation

To regulate international trade for fair competition

33. How is Keynesian economics applied in practice?

Through government policies such as fiscal stimulus and monetary easing

Through reliance on market forces for economic stabilization

Through international trade agreements and tariffs

Through income redistribution and progressive taxation

34. What is the role of interest rates in Keynesian economics?

To influence investment and borrowing

To regulate markets and promote competition

To provide public goods and services

To maintain price stability and control inflation

35. What is the crowding-out effect in Keynesian economics?

The reduction in private investment due to increased government borrowing

The increase in private investment due to decreased government borrowing

The decrease in government spending due to increased private investment

The increase in government spending due to decreased private investment

36. How is Keynesian economics relevant in the modern world?

It continues to inform government policies and responses to economic crises

It has been completely replaced by other economic theories

It is no longer applicable due to globalization

It is only relevant in developing countries

37. Which of the following is an example of expansionary fiscal policy?

Increasing government spending

Decreasing taxes

Both increasing government spending and decreasing taxes

Neither increasing government spending nor decreasing taxes

38. How does Keynesian economics differ from other economic theories?

It emphasizes the role of government intervention in stabilizing the economy

It relies solely on market forces for economic stabilization

It promotes income inequality as an incentive for economic growth

It disregards the impact of international trade on economic development

39. What is the impact of Keynesian economics on inflation?

It leads to high inflation

It has no impact on inflation

It leads to low inflation

It depends on other factors

40. What is the concept of 'inflationary gap' in Keynesian economics?

A situation where aggregate demand exceeds the economy's potential output, leading to inflation

A state of economic recession with high unemployment rates

The impact of changes in interest rates on investment

The effect of changes in consumer confidence on aggregate demand

Political Economy - Keynesian Economics MCQ Test 2