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 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

2. What is the concept of 'deflationary gap' in Keynesian economics?

A situation where aggregate demand is below the economy's potential output, leading to recession

A combination of high inflation and stagnant economic growth

The impact of changes in interest rates on investment

The effect of changes in consumer confidence on aggregate demand

3. What is the concept of 'animal spirits' in Keynesian economics?

Psychological factors that influence economic decision-making

The tendency of consumers to save rather than spend during economic downturns

The impact of technological advancements on productivity

The irrational behavior of financial markets

4. 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

5. What is the concept of 'demand-side economics' in Keynesian economics?

An economic theory that emphasizes the role of aggregate demand in driving economic growth

A focus on supply-side policies to stimulate economic activity

The impact of changes in interest rates on investment

The effect of changes in consumer confidence on aggregate demand

6. 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

7. 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

8. What is the impact of globalization on Keynesian economics?

It has increased the complexity of economic interdependence and policy coordination

It has reduced the need for government intervention in the economy

It has led to a decline in income inequality

It has eliminated the need for international trade agreements

9. 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

10. What is stagflation in Keynesian economics?

A combination of high inflation and high unemployment

A combination of low inflation and low unemployment

A combination of high inflation and low unemployment

A combination of low inflation and high unemployment

11. What is the concept of 'countercyclical fiscal policy' in Keynesian economics?

The use of government spending and taxation to offset fluctuations in the business cycle

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

12. According to Keynesian economics, what is the primary driver of economic fluctuations?

Consumer spending

Investment

Government spending

Exports and imports

13. What are some critiques of Keynesian economics?

It may lead to inflation and government deficits

It may discourage private investment and entrepreneurship

It may result in excessive government intervention and bureaucracy

All of the above

14. 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

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

Consumer spending

Investment

Government spending

Exports

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 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

18. According to Keynesian economics, what is the cause of unemployment during economic downturns?

Insufficient aggregate demand

Lack of investment

Excessive government intervention

Technological advancements

19. 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

20. 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

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

To stimulate economic growth and increase aggregate demand

To regulate markets and promote competition

To provide public goods and services

To maintain price stability and control inflation

22. What is the main focus of Keynesian economics?

Supply-side policies

Monetary policy

Government intervention

Free market principles

23. What is a liquidity trap in Keynesian economics?

A situation where monetary policy becomes ineffective due to zero or near-zero interest rates

A situation where fiscal policy becomes ineffective due to budget constraints

A situation where government intervention leads to market distortions and inefficiencies

A situation where international trade is restricted and barriers are imposed

24. According to Keynesian economics, what is the role of government in stabilizing the economy?

Minimal intervention

No intervention

Complete control

Active intervention

25. 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

26. 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

27. What is the natural rate of unemployment in Keynesian economics?

The rate of unemployment that exists when the economy is at full employment

The rate of unemployment that exists during economic recessions

The rate of unemployment that exists when government intervention is minimal

The rate of unemployment that exists when inflation is low

28. 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

29. 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

30. What is the concept of the crowding-out effect in Keynesian economics?

The decrease in private investment due to government borrowing

The increase in private investment due to government spending

The decrease in government spending due to private investment

The increase in government spending due to private borrowing

Political Economy - Keynesian Economics MCQ Test 3