Q19. The economy moves between recessions (high unemployment), and inflationary times. According to the Keynesian economic view, during a briskly productive economy with rising inflation, contractionary fiscal policy should be used. This type of policy includes ________.

a. decreased government spending and tax increases

b. increasing government spending and tax cuts

c. increasing the federal funds rate

Q20. Say's Law:

a. is a central belief of Keynesian economists.

b. is widely held to be more accurate in the short run rather than the long term.

c. states that supply creates its own demand.

Q21. Economists who hold to Neoclassical views are most aptly described as ________ .

a. economic activists

b. believers in laissez-faire, or letting the economy correct itself

c. aggregate demand policy interventionists

Q22. If a neoclassical model shows increasing wages in the economy in the short run, what else will likely occur?

a. A rightward shift of the short-run aggregate supply curve.

b. An inflationary increase in price level.

c. A change in government policy to decrease in aggregate demand.