Answer True or False for each of the following.

The Keynesians claim interest rates guarantee that savings will equal intended investment.

The Keynesians claim that wages and prices are “downward sticky”.

In the Keynesian model the velocity of money moves against GDP.

Government spending can raise Aggregate Demand and real GDP in the Keynesian model.

Keynesians believe that monetary policy is very powerful at moving real GDP.

The Keynesians felt that the Great Depression was caused by inadequate demand partly coming from the stock market crash and partly from a lack of income growth for most people.

Contractionary gaps are more common than expansionary ones in the Keynesian model.

30. As the manager of a monopoly, you face potential government regulation. Your inverse demand is P = 30 - 2Q, and your costs are C(Q) = 10Q.

a. Determine the monopoly price and output.

Monopoly price: $

Monopoly output:  units

b. Determine the socially efficient price and output.

Socially efficient price: $

Socially efficient output:  units

c. What is the maximum amount your firm should be willing to spend on lobbying efforts to prevent the price from being regulated at the socially optimal level?

$