A key difference between the new classical and the new Keynesian views of the business cycle is the role played E Select one: O a. unexpected changes in aggregate demand. Ob. the growth rate of the quantity of money. Oc expected changes in aggregate demand. d. government expenditure on goods and services.
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A: The above statement is true. According to the new Keynesian cycle theory firms and households have…
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A: The short run equilibrium is the situation when the short run aggregate supply (AS) curve intersects…
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A: The overall demand for final product ANd services in an economy at a given time is thought as…
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A: Business cycle refers to increase and decrease in real GDP. It refers to expansion and contraction.
Q: c. d. A key question in macroeconomics is why the economy experiences business cycle fluctuati…
A: The ups and downs in the economy of the country is a result of business cycle.
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A: Real business cycle theory doesn't incorporate aggregate supply.
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A: “Since you have posted a question with multiple sub-parts, we will solve first three subparts for…
Q: Question 24 One of the most important views expressed by classical macroeconomisls was thal O A.…
A: Classical economists are the people who have their different perspective to explain a market than…
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A: In short run and long run Phillips curve behave differently and Phillips curve shows the inverse…
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A: The real business cycle focuses on the real variable or changes in the technology and productivity.…
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A: Keynesian economics refers to a set of macroeconomic theories and models that explain how aggregate…
Q: oes it make sense that wages would be sticky downwards but not upwards? Why or why not?
A: Wage is an installment typically finished by a business to a worker for administrations presented by…
Q: Which of these are examples of positive real shocks? a Technological booms b, Higher jumps in oil…
A: Positive real shock either increases the demand or supply in the economy.
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A: Introduction Recessionary gap is the difference between real GDP and potential GDP. Here actual…
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A: Hey, Thank you for the question. According to our policy we can only answer 1 question per session…
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A: solution : The Keynesian's explanation of business cycle is based on unstable inflationary…
Q: The lowest part of a recession is referred to as its. O a. Peak O b. Depression O. Boom Od. Trough
A: Business cycle can be seen in the following diagram
Q: Explaining how employment is typically affected during each phase?
A: The classical business cycle represents the path of economic growth, how the economy is growing…
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A: Answer -
Q: According to the dynamic AD-AS model, what is the most common cause of inflation? O A. Total…
A: Dynamic AD-AS model presents a dynamic short-run theory of output, inflation, and interest rates.
Q: The term business cycle refers to the Select one: O a. short-tenm ups and downs in the price level O…
A: Answer is given below
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A: Keynesians accept that buyer demand is the essential main impetus in an economy. Accordingly, the…
Q: PLEASE ANSWER ALL PARTS OF QUESTIONS 1 AND 2.
A: Hey, Thank you for the question. According to our policy we can only answer up to 3 subparts per…
Q: Is fiscal policy, say an increase in government expenditures (G), effective according to the Real…
A: Real Business Cycle Theory states that business cycle phases recession, depression, recovery are…
Q: Suppose that the economy is initially in a steady state and that some of the nation's capital stock…
A: Answer-
Q: Assume that output began at its natural level. By using AD-AS (upward sloping) and Phillips curves,…
A: Phillips curve is a curve that shows that the inflation rate and unemployment rate are inversely…
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A: "Since you have asked multiple questions, we will solve the first question for you. If you want any…
Q: The IS curve shows the combinations of, and where the goods market is in equilibrium. A. the real…
A: Since you have asked multiple questions, we will solve the first question for you. If you want any…
Q: emphasize(s) that changing productivity and technology are the main reasons behind fluctuations in…
A: The measure that depicts the fluctuations in the country's national income level that represents…
Q: b) What differences emerge between Keynesian and Classical economists regarding understanding the…
A: The classical school of thought proposed the theory of market economies which viewed a free market…
Q: What is 'Business Cycle'?
A: “Hey, thank you for the question. Since there are multiple questions posted, we will answer first…
Q: Suppose government-spending increases while the economy is at full employment. 1. What effect will…
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Q: real business cycle theory suggest that _______ not important in explaining short-term fluctuations…
A: The Real business cycle theory states that the fluctuations in the economy are largely explained by…
Q: LRAS price level SRAS AD Qn real GDP Consider the diagram above and assume that an economy X is now…
A: When an economy is faced with a supply shock, the aggregate supply curve shifts left (AS1 to AS2),…
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- Two main macroeconomic concerns are the problems of inflation andunemployment.a. What are the social costs of inflation? Explain TWO of them? b. What is natural rate of unemployment? Explain the TWO main causesof natural rate of unemployment. With reference specifically to ONEof these causes, suggest ONE practical government policy that reducesthe natural rate of unemployment.b) What differences emerge between Keynesian and Classical economists regarding understanding the business cycle and how the economy should best be managed? c) Present an argument where you express support for either a Keynesian approach OR a Classical approach. You should make a case in arguing for only ONE of these two different approaches and use real-world example.1 1A) Using the static AD/AS model to explain how the job keeper (wage subsidy) policy worked to sustain the economy even though unemployment rate in Australia had increased during Covid-19 period? 1B) justify in detail the difference between U shaped recoveries and V shaped recoveries?
- Suppose in the real business cycle model that there is a simultaneous temporary increase inboth current government spending and in the current money supply. Draw diagrams for thelabour, goods and money market, and the production function. Determine the equilibriumeffects of these two shocks occurring simultaneously on employment, output, consumption,investment, money, real wages, the real interest rate, and the price level. Provide a detailedeconomic analysis explaining your results with the aid of the diagrams.Describe the behavior of consumption, investment, labor, productivity, wages, the price level and the money supply over the business cycle both in terms of correlation, magnitude and lead vs lag. Give the economic intuition of the results on consumption, investment, produc- tivity, wages and price levels. [Note, I am looking for the correlation between each of these items and income. Give leads and lags only when the most important correlation is not contemporaneous. You may trust the author of the book on this one.]Please no written by hand solution Consider a scenario of a closed economy in the short run where price level is fixed. Assume that bothtaxes and money supply increase in a way that keep output constant in equilibrium (suppose that themarginal propensity to consume is less than one). Which of the following may result from the policychange?a) It will lead to an increase in investment but a decrease in consumption.b) It will result in an increase in investment but a decrease in government spending.c) It will lead to an increase in investment and private saving.d) It will decrease investment but increase in public saving.
- c. According to the Keynesian theory, what would be the effect of the “A wave of investor and consumer pessimism about the future profitability of capital investments and lower future income” on output (Y), the real interest rate (r), employment (L) and the price level (P)? Distinguish between the short run and the long run effects by using the IS-LM-FE and AD-AS models and the effective labor demand theory.Consider a one-period economy which experiences the destruction of some of the nation’s capital stock (say through a hurricane is de- stroyed). How should this effect equilibrium, consumption, output and labor supply? Now, let’s say the government tries to offset some of the declines in capital on output and hours worked by increasing govern- ment spending. What is the likely outcome of this policy intervention in terms of consumption? In our model, the affects of changes on wages are ambiguous because the income and substitution effects move in opposite directions. How do (many) macroeconomists deal with this ambiguity in terms of study- ing business cycle? How do economists resolve this ambiguity when studying long term economic development? Consider an economy with a straight line PPF. Show how an increase in government spending paid for by an increase in lump sum labor taxes affects outcomes. Do the same for an increase in government spending financed by a proportional income…1. Using the AS-AD model, graph and explain the effects of Covid-19 on the U.S. macroeconomy by comparing 2019 vs. 2020. Label the years on all curves, the axis, and the equilibrium. Ignore macroeconomic policy responses, such as the CARES act. Which curves shifted which direction, and why? 2. Now introduce any macroeconomic policy response. What curves shift which direction, and why? 3. What were the equilibrium quantities for both axis?
- 1) According to the Phillips Curve, as unemployment falls what happens to inflation? Why? 2) According to the Phillips Curve, as unemployment rises what happents to inflaiton? Why? 3) According to the Aggregate Supply/ Aggrgeate Demand model, if AD increases what happebs to Price Level GDP and Unemployment 4) Accroding to the AS/AD model, if AD decreases what happens to PL, GDP and unemployment? 5) According to the AS/AD model if AS decreases what happens to PL GDP and unemployment? 6) Based on your answer to #5 how would you show the decrease in AS on the Philips Curve?Consider a keynesian macromodel Y=(C0+G+I) / (1-c) where C0 is autonomus consumption, G is government consumption expenditure, I is investment expenditure, c is the marginal propensity to consume. In this model, if lthere is an increse in both labor productivity and the marginal propensity to consume while autonomus expenditures remain unchanged, what will happen to the level of employment? a. can't say for sure b. decreses c. stays the same d. increasesConsider the figure to the right. In the absence of a change in aggregate demand, what effect does negative economic growth have on the price level over time, other things being equal? Why? 1.) Draw a new long-run aggregate supply curve that shows the effects of negative economic growth on the economy's long-run equilibrium. Label your line 'LRAS2.' 2.) Indicate the economy's new long-run equilibrium price and level of real GDP. Label this point 'E2.' The change in the price level over time due to negative economic growth and the subsequent shift in long-run aggregate supply is known as