1. In the Keynesian model, injections:

a.Are assumed to be a function of national income

b.Are assumed to be exogenous (independent of national income) c.Decrease aggregate demand

d.Include consumption expenditure.

2. In perfect competition if firms are making abnormal profit other firms will enter and the:

a.average cost curve will shift downwards.

b.marginal revenue curve will shift upwards.. c.marginal cost curve will shift outwards d.marginal revenue curve will shift downwards.

3. Which one of the following assumptions is NOT used in the simple Keynesian model with a government sector?

a.Government tax revenues are independent of national income

b.Interest rates are fixed when government borrowing rises

c.Consumption is positively related to national income

d.Money wages are fixed