1) Explain what will happen in a nation that tries to solve a structural unemployment problem using expansionary monetary and fiscal policy. Draw one AD/ AS diagram, based on the Keynesian model, for what the nation hopes will happen. Then draw a second AD/ AS diagram, based on the neoclassical model, for what is more likely to happen (if drawing your answer is a challenge, please describe your answers in words and/or numbers). 2) Explain why the government might prefer

1) Explain what will happen in a nation that tries to solve a structural unemployment problem using expansionary monetary and fiscal policy. Draw one AD/ AS diagram, based on the Keynesian model, for what the nation hopes will happen. Then draw a second AD/ AS diagram, based on the neoclassical model, for what is more likely to happen (if drawing your answer is a challenge, please describe your answers in words and/or numbers). 2) Explain why the government might prefer

Economics:

10th Edition

ISBN:9781285859460

Author:BOYES, William

Publisher:BOYES, William

Chapter15: Macroeconomic Viewpoints: New Keynesian, Monetarist, And New Classical

Section: Chapter Questions

Problem 5E

See similar textbooks

Similar questions

Explain how each of the following events or policies will affect unemployment in a neoclassical model: tax cut for consumers a rise in business confidence that increases investment a fall in export sales to a major trading partner a rise in income levels for consumers throughout the economy cheaper imported products a fall in government spending
How can we reconcile these four classical models? In other words, what are some positives that can be taken from each model? Linear stages theory, Structural-change model (Lewis two-sector model), International dependence/dominance model, Neoclassical model
Hayek says that markets will heal themselves and that government should not intervene. How does the AD-AS model reflect Hayek’s idea that governments cannot increase real GDP beyond the level that the free market economy is able to produce? Do you believe that the Hayek’s classical AD-AS model explain the factors that cause changes (shifts) in AS realistically? Why or why not?
One practical limitation of the Classical or Neoclassical model is that it suggests allowing the economy to self-correct in the long run, but recessions may last a very long time. How severe is this problem and why? What is one example?
Does the graph above reflect a Classical Model or a Keynesian Model? How do you know? What is happening in this economy in the short run?
Compare the classical economic theory that was used prior to the Great Depression to the Keynesian theory used after the Great Depression. Your response must be at least 200 words in length .
John Maynard Keynes spearheaded a new school of macroeconomic theory during the Great Depression. Which of the following represents a Keynesian point of view of macroeconomics?
Based on what you know about events in Europe after World War I, why does Keynes say the social and industrial changes on the European continent are “of a different kind altogether” from those in England? Explain.
Keynesian economics defends budget balance. However, according to economists, budget balance may exacerbate the effects of the business cycle. Isn't it also a Keynesian view to use discretionary policy to smoothen the business cycles? Aren't those two views contradictory?
True or false question: Although there is no specific founder of macroeconomics, John Maynard Keynes is usually cited as such.
How were the Keynesian, Monetarist and New Classical theories of the economy synthesized to develop the New Keynesian Economics?
Between 2007 and 2009, the United States experienced a severe financial crisis and economic downturn commonly known as the Great Recession. Starting in 2006, housing values fell 30%, causing losses in mortgage-backed securities for families and financial institutions. The recession was marked by a drop in aggregate demand that caused a decline in GDP and an increase in unemployment. QUESTIONS How did the AD/AS equilibrium change over time? Support your claims by referring to your AD/AS model. Select an economic factor (GDP, unemployment, price level) and explain what impact any shifts in AD or AS (or both) had on your chosen factor.