According to Keynesian business cycle theory, what should the government do in response to a recession? A. Cut government spending B. Increase government spending C. Increase interest rates D. Expand the money supply E. A and D F. B and D

According to Keynesian business cycle theory, what should the government do in response to a recession? A. Cut government spending B. Increase government spending C. Increase interest rates D. Expand the money supply E. A and D F. B and D

Economics:

10th Edition

ISBN:9781285859460

Author:BOYES, William

Publisher:BOYES, William

Chapter14: Macroeconomic Policy: Tradeoffs, Expectations, Credibility, And Sources Of Business Cycles

Section: Chapter Questions

Problem 18E

See similar textbooks

Related questions

Q: What are some problems with Keynesian business cycle theory? A. It does not predict stagflation B.…

A: According to Keynes, the vacillations in the marginal efficiency of capital lead to the business…

Q: What is the difference betw een the Keynesian model and the classical model when it comes to…

A: The Classical Model suggests that the economy is always at the full employment level of output,…

Q: real business cycle models (RBC) are preferable to traditional Keynesian macroeconomic models.

A: real business cycle models (RBC) are preferable to traditional Keynesian macroeconomic models. -…

Q: In Keynesian-cross model, Keynesian argue that economy has a potential to attain any equilibrium.…

A: The Keynesian-cross model is the model of income, output and employment. Keynes was one of the most…

Q: Q)compare the real business cycle model to the coordination failure model.

A: Real business cycle model The real business cycle states the theory regarding changes in the…

Q: If the economy is in a recessionary period how, specifically, might the government use their three…

A: A recession is a period of downturn in the business cycle when there is a decline in the country's…

Q: a.Explain the condition of an economy experiencing a decrease of 3% in aggregate expenditure. b.…

A: The Keynesians hold that wages are sticky such that they do not change in the downwards direction…

Q: During the recession of 2008, Did the US Government take a page of the Keynesian Macro theory to…

A: Keynesian macro theory primarily identifies the role of government or government intervention in…

Q: According to the Keynesian framework, ____________ in _______________ may cause inflation, but not a…

A: Inflation usually means rise in prices and and recession is such a period where less demand are seen…

Q: What is the role of supply shocks in the Keynesian explanation of business cycles? What are the…

A: Due to the oil crisis the supply curve received a shock as due to increase in price of oil. Thus…

Q: a)Keynesian economists believe that the business cycle is caused by external factors, such as…

A: : Models of economics: A money related model is a smoothed-out variation of reality that grants us…

Q: According to the Austrian business cycle theory, a key feature of a deflationary depression is A)…

A: According to the Austrian business cycle, business cycle occurs due to excessive credit created by…

Q: 51. What is the essence of "Keynesianism"? That is, what is/are the indispensable

A: Keynesian accept that, since costs are to some degree unbending, variances in any part of…

Q: A key difference between the new classical and the new Keynesian views of the business cycle is the…

A: There are four economic theories mainly New classical economics, Keynesian economics, supply side…

Q: However, the labor market is a derivative of the goods market in the Keynesian theory (“principle of…

A: According to the Keynesian School of Economics, the most important factor which impacts the real…

Q: 1.6 In the Simple Keynesian Macroeconomic Model, which of the following will determine the level of…

A: Simple Keynesian macroeconomic model refers to the nature of economic growth when there is a change…

Q: Discuss the key problem associated with the Real Business Cycle model. How can this problem be…

A: The fluctuation in the economic activity is tracked by the business cycle. In an economy, the fall…

Q: On a business cycle diagram, the trough represents: a. An expansionary phase b. A contractionary…

A: Business cycle: A business cycle is a graphical presentation of the coordinated cyclical upswings…

Q: Regardless of many assumptions, an equilibrium business-cycle model can go a long way in matching…

A: Business-cycle: It refers to the conditions under which the growth and decline have been taken into…

Q: According to the Real Business Cycle theory, a) Business cycles are originated by changes in real…

A: Business cycles are being marked by the alternate phases of expansion and contraction in aggregate…

Q: According to the Austrian theory of the business cycle, the following is false A. A cluster of…

Q: Who favors John Maynard Keynes theories currently and how are they applied?

A: John Maynard Keynes is an British economist who developed Keynesian economics in 1930s in order to…

Q: Question 5. What is the name of Keynesian book published in 1936?

A: Keynesians was a British economist who believed that the primary driving force of the market economy…

Q: What are the three well-structured paragraphs the basic principles of the New Keynesian Economics?

A: The field of economics that depicts a modern twist on the doctrine of macroeconomics evolving from…

Q: 1) Explain what will happen in a nation that tries to solve a structural unemployment problem using…

A: * ANSWER :- *(1)

Q: Keynesian business cycle theory suggests that government intervention in markets may create…

A: The theory that depicts the decline and growth of a nation of an economy that is being measured…

Q: An increase in the money supply will increase real GDP growth in the long run in A) the Real…

A: GDP (Gross Domestic Product)/ output of a country is the market value of all finished (final) goods…

Q: Explain in detail how real business cycle theory is different from the rational expectaion theories…

A: Business cycle refers to the stages occurred when the product enters the market, how the product…

Q: Which of the following causes of an economic expansion is consistent with real business cycle…

A: An rise in the degree of economic activity, as well as the commodities and services offered, is…

Q: There are three big issues in macroeconomics – national output, unemployment, and inflation. Briefly…

A: Considering macroeconomics, it talks about the economy as a whole and not an individual. The major…

Q: In the 1930's, Keynes tried to a. support classical macroeconomic theory b. argue against classical…

A: In an economy, there are different schools of economic thoughts, such as classical, Keynesian,…

Q: How is Keynes position different from classical position with respect to wages, prices, and Say’s…

A: Classical Position on Wages, Prices and Say's law: The classical economist emphasized the…

Q: We have discussed two models that describe the relationship between inflation and economicgrowth.…

A: From the given, the recession can be caused by a decrease in the aggregate demand is followed by the…

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: Evidence indicates that a recession occurs at about the same time as a decrease in investment.…

A: The real business cycle theory is one of the approaches to understand the business cycle in an…

Q: The purpose is to know if you can define each concept through a clear and precise explanation.…

A: 1. deficit The deficit can be understood as a shortage or lack of something because the cost is…

Q: Describe the four phases of the classical business cycle explaining how employment is typically…

A: A business cycle is a wave-like fluctuation in the economy and the wave-like fluctuation will have…

Q: What is most likely to occur during the expansionary phase of the business cycle? A.) Real GDP…

A: Expansionary phase of the business cycle is also known as economic recovery. It is characterized by…

Q: Suppose an economy is experiencing recession. From the list below, select two (2) policy tools that…

A: The Gross Domestic Product (GDP) refers to the market value of all the final goods and services…

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 types of shocks are thought to cause most of the fluctuations that are called business cycles…

A: The new Keynesian models would result in the much later school of thought which explained the…

Q: Friedman and Schwartz, Keynes, Hayek and Robins, Schumpeter, Hansen and Wilson, and Temin emphasize…

A: Answer - According to Keynes the causes of Great depression are -Keynes argued that the major…

Q: According to Keynesian business cycle theory, if consumption and investment fall, what will happen…

A: According to Keynes, a fall in investment leads fall in income which leads to decreases consumption…

Q: 1. Which of the following is not an assumption of the simple Keynesian model ? (a). We are in the…

A: 1. Aggregate output is equals planned expenditure is not an assumption of the simple Keynesian…

Q: The government of Prime Minister Shinzo Abe said it would oﬀer some $15 billion in ﬁnancing for…

A: 1. Japan being the third largest GDP earner,plan to boost economy amidst corona virus pandemic by…

Question

According to Keynesian business cycle theory, what should the government do in response to a recession?

A. Cut government spending

B. Increase government spending

C. Increase interest rates

D. Expand the money supply

E. A and D

F. B and D

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

Question 4Why the classical economists failed to explain the reason of the great depression? What did the Keynesian economists put forward in reponse to that event?
Discuss the main differences between Keynesian school with those of the Neo-Classicists. Please answer it ASAP. Thank you
7. Which of these crises dismantled the Keynesian consensus? a.The Great War b.Stagflation in the 1970s C.The Great Depression d.The Great Recession
According to Keynesian business cycle theory, if consumption and investment fall, what will happen to government spending? A. It will fall B. It will stay the same C. It will rise D. Insufficient information to answer the question
a.Given what you have learned about the U.S. Business cycle over the past 60 years, please explain 4 ways you can use that information to enhance your odds of achieving future personal success. Please do not talk about your financial portfolio and playing around with the stock market. b. Explain in some detail the 4 phases of the business cycle, Please don’t include Depression as one of them. including the characteristics of each. Be thorough! You should have at least 4 characteristics for each phase! Include in your discussion on how each phase of the business cycle might impact your life. c.Explain in detail, 4 possible causes of change in the direction of the business cycle. You are looking for things that are out of the control of the government. Do not talk about fiscal or monetary policy tools here. Don’t say inflation or recession!
Is fiscal policy, say an increase in government expenditures (G), effective according to the Real Business Cycle (RBC) theory? If it is, should it be used? Explain by using production function, labor market, goods market and asset market equilibrium tools.
If a Keynesian model shows that aggregate demand for both goods and labor has shifted to the left, while wages are sticky and remain at the same level and prices remain at the same prices, what will be the result in the labor market? a a shortage of labor b depression c coordinated wage reductions d a surplus of labor
1. Which of the following is not an assumption of the simple Keynesian model ? (a). We are in the short -run (b).Prices are constant (c).Output is demand -determine (d). Output is supply -determine (e). Aggregate output equals planned expenditure. 2. Which of the following is not one of the principal economic goals for the economy ? (a). Economic growth (b).Stable prizes (c). Strong national defense (d). Full employment (e). A strong cedi 3. Which is not a cause for business cycles considered by macroeconomists. (a). Greed (b) variations in optimism (c) shocks to money supply (d) shocks to technological ability 4. Which of the following question is of most interest for macroeconomics. (a). Why do foreigners immigrate to Ghana. (b).What is the appropriate stance of antitrust policy (c)Why is there inflation (d). What does the steel industry wants to tariffs 5. Which of the following statement is true ? (a). Final goods as produce in the same year as the related final good…
Only typed answer Which of the graphs most accurately illustrates real business cycle theory? Graph A Graph B Graph C Graph D Which of the graphs most accurately illustrates new classical theory (unanticipated policy, short run)? Graph A Graph B Graph C Graph D
Consider the neo-classical approach to macroeconomics. What does that theory suggest will happen when there is a recession? Group of answer choices a. Wages will decrease b.Wages will increase c. Government should spend less money d. Government should spend more money
Give an example of a concept you think may be associated with weak macroeconomic performance. Explain why this is the case. Use real-world examples and explanations. concepts lists - economics and the economic way to thinking - economic theory - scarcity -opputunity cost - market and competitive markts -supply -how markets reach equilibrium price and quantity
Is Keynesian economics relevant in today's new normal? In what way? Explain...