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

Total Questions : 50
Expected Time : 50 Minutes

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

Consumer spending

Investment

Government spending

Exports and imports

2. What is the role of aggregate supply in Keynesian economics?

To promote economic growth

To regulate interest rates

To manage government spending

To stabilize the economy

3. What is the concept of 'automatic stabilizers' in Keynesian economics?

Government policies that automatically adjust to stabilize the economy during economic fluctuations

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

4. What is the main tool of monetary policy in Keynesian economics?

Interest rates

Government spending

Tax rates

Exchange rates

5. What is the concept of 'income redistribution' in Keynesian economics?

The shifting of wealth and resources from the rich to the poor through government policies

The equal distribution of income among all individuals in society

The concentration of wealth in the hands of a few individuals

The impact of changes in exchange rates on international trade

6. 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

7. 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

8. 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

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 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

11. 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

12. 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

13. 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

14. 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

15. What is the paradox of thrift in Keynesian economics?

The idea that increased saving can lead to decreased aggregate demand

The idea that increased government spending can lead to decreased aggregate supply

The idea that increased investment can lead to decreased consumption

The idea that increased taxation can lead to decreased economic growth

16. 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

17. 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

18. 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

19. 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

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 main tool of Keynesian monetary policy?

Interest rates

Government spending

Tax rates

Exchange rates

22. 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

23. What is the concept of the marginal propensity to invest 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

24. 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

25. 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

26. What is the role of aggregate demand in Keynesian economics?

To promote economic growth

To regulate interest rates

To manage government spending

To stabilize the economy

27. What is the concept of the marginal propensity to tax 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 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

29. 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

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

The reduction in private sector investment due to increased government borrowing

The displacement of domestic industries by foreign competition

The decline in consumer spending during economic recessions

The negative impact of inflation on economic growth

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

To promote free market principles

To regulate interest rates

To manage aggregate demand and stabilize the economy

To reduce income inequality

32. What is the IS-LM model in Keynesian economics?

A model that shows the relationship between interest rates and income in the economy

A model that explains the relationship between inflation and unemployment

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

A model that illustrates the relationship between aggregate demand and aggregate supply

33. 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

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 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

36. Which of the following is a key component of Keynesian economics?

Laissez-faire capitalism

Supply-side economics

Monetary policy

Demand-side economics

37. 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

38. What is the multiplier effect in Keynesian economics?

The magnification of initial government spending through increased consumption and investment

The reduction in government spending to control inflation

The increase in taxes to reduce income inequality

The impact of international trade on economic growth

39. 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

40. 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

41. 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

42. 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

43. 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

44. 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

45. What is the main focus of Keynesian economics?

Supply-side policies

Monetary policy

Government intervention

Free market principles

46. What is the concept of the paradox of cost in Keynesian economics?

The decrease in production costs due to increased demand

The increase in production costs due to decreased demand

The decrease in production costs due to decreased supply

The increase in production costs due to increased supply

47. 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

48. What is the role of fiscal policy in Keynesian economics?

To control the money supply

To regulate interest rates

To manage government spending and taxation

To promote free trade

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

Minimal intervention

No intervention

Complete control

Active intervention

50. What is the impact of Keynesian economics on income distribution?

It promotes income inequality

It has no impact on income distribution

It reduces income inequality

It discourages wealth accumulation

Political Economy - Keynesian Economics MCQ Test 1