While it may seem simple and unobjectionable to non-specialists, one o

While it may seem simple and unobjectionable to non-specialists, one of the many issues that illustrates the divergence of post-Keynesian economics from mainstream economics is the idea of time. Most models of neoclassical economics utilize the notion of "logical time," in which markets (whether they be capital, goods, or labor markets) return to equilibrium after a disturbance is introduced and then overcome. While few economists object to this general model, post-Keynesians try to shift focus away from the "long run"-level analysis and analyze instead events in "historical time," emphasizing the real-world effect of deviations from equilibrium.

However, post-Keynesian economics cannot be understood simply as a reaction to, or adjustment of, the ideas of Keynes. In fact, because many post-Keynesians believe that the movement known as Keynesianism actually represents a severe divergence from the ideas of Keynes, they are in the position of both resuscitating and updating his theories. One example of this phenomenon is the labor market, on which traditional Keynesians follow the classical theory (that is, pre-Keynesian) of unemployment. While traditional and post-Keynesians both support [deficit spending] (known as "pump-priming") as a solution to short- and medium-term inefficiencies in the labor market, traditional Keynesians believe that, so long as wages and prices are perfectly flexible, those inefficiencies will disappear. That is the extent of the story for the traditional Keynesian, but viewed through the lens of "historical time," such inefficiencies are problems worthy of the economist's further study.

1. The passage suggests which of the following about the deficit spending mentioned in the highlighted text?

(A) To a traditional Keynesian, it is a way to eliminate inefficiencies in the labor market.
(B) To a post-Keynesian, it solves all of the problems associated with inefficiencies in the labor market.
(C) To both traditional and post-Keynesians, it is a key aspect of the classical theory of unemployment.
(D) To a traditional Keynesian, it is a way to turn attention away from "long run"-level analysis.
(E) To a post-Keynesian, it is a superior strategy to that of "pump-priming."



2. The author of the passage would be most likely to agree with which of the following statements about the idea of time mentioned in the first sentence of the passage?

(A) It underlies the most trenchant critiques of the classical theory of unemployment.
(B) It applies most directly to theories of the labor market, which has long been misunderstood by economists.
(C) It represents the most serious problem with the positions held by post-Keynesians.
(D) It is the leading cause of the inefficiencies that wreak havoc with economic theories.
(E) It illustrates an important distinction between streams of economic thought.



3. It can be inferred from the passage that which of the following is true about traditional Keynesians?

(A) When studying the labor market, they are mainly concerned with eliminating short- and medium-term inefficiencies.
(B) In criticizing the classical theory of unemployment, they understate the importance of "pump-priming."
(C) They favor the notion of "historical time" to that of "logical time."
(D) They support more of the theories of Keynes than do post-Keynesian economists.
(E) As neoclassical economists, they study the real-life impact of inefficiencies that appear in the capital, goods, and labor markets.



4. The passage is primarily concerned with

(A) using a standard concept in neoclassical economics to illustrate a characteristic of a di¤erent view
(B) evaluating competing explanations of equilibrium in the labor market
(C) comparing the notion of “historical time”with that of “logical time”as they apply to economics
(D) clarifying the positions of a misunderstood …eld of economics by explaining a key di¤erence with another field
(E) suggesting that “long run”-level analysis leads to economic misunderstandings and poor policy



5. Which of the following best summarizes the main point of the passage?

(A) The importance of time in economic theories has long been understated, and its inclusion sheds new light on possible methods to curtail unemployment.
(B) The appearance of the post-Keynesian school of economics allowed mainstream economists to abandon their reliance on traditional theories such as the classical theory of unemployment.
(C) The ideas of Keynes remain among the most crucial in contemporary economic thought, but traditional Keynesians have long misrepresented them.
(D) Traditional Keynesians and post-Keynesians share some views, but the way each group approaches the idea of time causes them to pursue di¤erent paths of study.
(E) The labor market is a controversial sub…eld of economics, one in which Keynesians have little to contribute.



6. Which of the following best characterizes the di¤erence between the way traditional Keynesians and post-Keynesians view ine¢ ciencies in the labor market, as described in the passage?

(A) Post-Keynesians di¤er from traditional Keynesians by studying practical e¤ects of ine¢ ciencies in the labor market.
(B) Traditional Keynesians di¤er from post-Keynesians in that they consider short-term ine¢ ciencies less important than medium-term ine¢ ciencies.
(C) Post-Keynesians and traditional Keynesians both accept the accuracy of the classical theory of unemployment and diverge only in the details of its interpretation.
(D) Traditional Keynesians di¤er from post-Keynesians in that each group had a substantial e¤ect on the history of economic thought at di¤erent points in the 20th century.
(E) Both post-Keynesians and traditional Keynesians consider both “historical time”and “logical time”in evaluating the most important topic of study within the …eld of unemployment.



7. According to the passage, “logical time”is

(A) an aspect of most models of neoclassical economics
(B) now considered less useful than “historical time”
(C) irreconcilable with “long run”-level analysis
(D) a key tenet of post-Keynesian theory
(E) the mechanism by which markets return to equilibrium