Q13. If a Keynesian economist is advocating the current economic policy be to increase government spending, what is the state of the current economy?

a.The economy is experiencing an inflationary gap.

b.The economy is experiencing natural unemployment at potential GDP.

c.The economy is experiencing a recessionary gap.

Q14. Which of the following is NOT true about government spending as function of national income?

a.Government spending will fluctuate.

b.Federal, state and local governments determine the level of government spending through the budget process.

c.Government spending appears as a horizontal line on the Keynesian cross diagram.

Q15. A key part of the Income-Expenditure model is understanding that as GDP (or national income) rises, so does ________.

a.aggregate demand

b.aggregate supply

c.aggregate expenditure