Match the policies below to whether they would be said by a Keynesian or Neoclassical economist: A. Policy should concentrate on minimizing cyclical unemployment B. Since the long-run aggregate supply curve is fixed, increasing aggregate demand too much will just lead to inflation 1. Neoclassical 2. Keynesian

Match the policies below to whether they would be said by a Keynesian or Neoclassical economist: A. Policy should concentrate on minimizing cyclical unemployment B. Since the long-run aggregate supply curve is fixed, increasing aggregate demand too much will just lead to inflation 1. Neoclassical 2. Keynesian

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter22: Aggregate Demand And Aggregate Supply

Section: Chapter Questions

Problem 16P

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In the Keynesian model, if there is a sudden rise in the aggregate demand curve, in the short run, it will cause a inflation b deflation c increase in output d a and c
Economist who generally empgasize the importance of aggregate supply in determining the size of the macroeconomiy over the long run a- says law b-Neoclassical economists c-Keynes lasw dk- Neoclassical zone
In the Keynesian framework, for each of the following events which might cause a recession and/or inflation? Explain using Aggregate Demand/ Aggregate Supply. a. A large increase in the price of the homes that people own b. Rapid growth in the economy of a major trading partner c. The development of a major new technology offers profitable opportunities for business d. The interest rate rises e. The good imported from a major trading partner becomes much less expensive.
Summarize the Neoclassical model: A. The neoclassical model is built on the importance of aggregate demand as a cause of business cycles and a degree of wage and price rigidity, and thus does a sound job of explaining many recessions and why cyclical unemployment rises and falls. B. The neoclassical model emphasizes aggregate supply by focusing on the underlying determinants of output and employment in markets, and thus tends to put more emphasis on economic growth and how labor markets work. C. The neoclassical model is built on the importance of aggregate supply as a cause of business cycles and a degree of wage and price rigidity, but does a poor job of explaining many recessions and why cyclical unemployment rises and falls.
LRAS ADn SRAS ADi Pn Neoclassical zone ADk En Ei Intermediate zone Pk Ek Keynesian zone Yk Yi Yn Real GDP Say's Law states that supply creates its own demand. In the neoclassical zone on the graph above, supply is at its potential GDP, at full capacity. When aggregate supplies have reached their full potential output, what happens if demand shifts to the right? Select one: a. The GDP deflator shifts up and to the left. b. The aggregate supply outputs increase and LRAS shifts to the right. c. The aggregate demand prices increase as AD shifts to the right. d. The aggregate demand prices decrease as AD shifts to the right. Price Level
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In the Keynesian framework, which of the following events might cause a recession/inflation. Explain using the aggregate demand/aggregate supply. I only need the type of examples that go with the question though (Examples are crucial please!) d. The interest rate rises e. The good imported from a major trading partner becomes much less expensive
Suppose the economy goes into a recession. Which statement reflects a Keynesian response, and which reflects a neoclassical response? A. "The recession is likely caused by bad government policy, so active policy to solve the problem should be avoided" B. "The government should use fiscal policy to boost spending" 1. Neoclassical 2. Keynesian
Comparing neoclassical theory to Keynesian theory, it is safe to say that a. neoclassical theory places more emphasis on the government to solve problems while the Keynesian theory places more emphasis on the market to solve problems b. neoclassical theory place is more emphasis on the market system to solve problems the Keynesian places more emphasis on the government to solve problems c. Neoclassical theory and Keynesian theory both agree the government must be involved in the economy to get full employment d. None of the above
Suppose there is a negative TFP shock caused by a coronavirus. a. In response to the pandemic, the Fed bought a large amount of U.S. Treasury bonds from the public. How does that affect the money supply, if at all? Explain. b. In the neoclassical model, would an increase in the money supply affect real output or employment? Explain.
Do you believe that the Hayek's classical AD-AS model explains the factors that cause changes (shifts) in AS realistically? Why or Why not?
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