From a Real Business Cycle (RBC) point of view, what is the impact of a contractionary policy on an economy?

Q: Discuss how Keynesian economic can help a country facing an economic recession.

A: Monetary policy describes or portrays the actions taken by the monetary authority of the nation…

Q: What might be some Keynesian prescriptions to get the economy out of an economic slump (both fiscal…

A: Under the Keynesian theory, the aggregate demand is given by the sum of consumption demand (C),…

Q: How do propensities and multipliers, and even expectations affect the outcomes in a downturn

A: In an economy, when talking about propensity, expectations and multipliers, these are the ratios of…

Q: What is potential GDP How did the Keynesian perspective address the economic market failure of the…

A: GDP stands for Gross Domestic Product. It is a measure of value of all goods and services that are…

Q: In the Keynesian framework, which of the following events might cause a recession? Which might…

A: Note:- Since we can only answer up to three subparts, we'll answer the first three. Please repost…

Q: Brief explanation on keynesian model and its diagram

A: Aggregate Demand: It refers to the total demand for goods and services in the economy within a given…

Q: cost of a recession from the keynesian spending model perspective

A: Keynsian spending model pertains to the  aggregate-spending(AD) in the economy. In short-run, the…

Q: What is the effect of a decrease in government spending in the IS LM model?

A: IS curve: - IS curve shows different combinations of interest rate and the level of GDP where…

Q: Explain the relationship between consumption and saving in the Keynesian model.

A: The total expenditure within the economy and its consequences on output, employment, and inflation…

Q: In our modern economy, the adjustment process necessary to eliminate a recessionary gap is very…

A: The adjustment process implies a self-adjustment mechanism through price adjustment. This…

Q: From a spending model perspective, explain the causes of a recession

A: Recession refers to the situation where the growth rate of GDP is become negative between the two…

Q: Consider a standard AD-AS model. If the marginal propensity to consume is zero, a temporary tax cut…

A: Here, MPC=0, which means all the income is saved or Income=MPS As we can see the purple line is the…

Q: According to Keynesian business cycle theory, what should the government do in response to a…

A: A recession is a situation in which economic activities start to decline in the economy of a…

Q: In this question, we assume Canada is a closed economy and is in its long-run equilibrium.…

A: Meaning of IS-LM Curve: The term IS-LM curve refers to the combination between market goods and…

Q: What role do inventories play in the equilibrating process in the simple Keynesian model (as…

A: The inventories are the unsold stock of output in the economy. Thus, it is unsold goods and services…

Q: According to the Keynesian economists, who reject the self-regulating economy, how does the economy…

A: Before the Keynesian economics came into existence, there was a classical believe that economy is…

Q: According to mainstream economists, what is the usual cause of macroeconomic instability? What role…

A: The Economic instability means shock to an economy.  Instability leads to more unemployment, low…

Q: Suppose most business executives expect a slowdown in the economy.  How might this situation affect…

A: The loss of business and consumer confidence leads to an economic recession.

Q: How do Keynesians and classicals differ in their beliefs about how long it takes the economy to…

A: An economy is said to be operating at its long-run equilibrium if the output level of the economy…

Q: Consider a hypothetical country in which, initially, real GDP equals potential GDP. Suppose that the…

A: In an economy, government purchases refers to the total amount of money spent by the government on…

Q: what is the impact of a contractionary policy on the U.S. economy from a new keynesian point of…

A: Step 1: New Keynesian Economics provide macroeconomic foundation for the Keynesian economics. Unlike…

Q: Keynesian economists argue that facing an economic recession. and are the surest way to ensure full…

A: The economies around the world tend to depend upon the working of the government, and also the…

Q: Why Keynesian economics become popular back in 1930’s. Do you think that during 2005-08 financial…

A: Keynesian economics was a focus made by J.M Keynes to understand the great depression of 1930. His…

Q: THE SIMPLE KEYNESIAN MACROECONOMIC MODEL CONCLUDES THE FOLLOWING ABOUT THE SOUTH AFRICAN ECONOMY

A: In the 30 months leading up to February 2006, it rose with a goal range of 3% to 6%.

Q: 'Keynesian policies to solve the problem of unemployment will not work because they will conflict…

A: Keynesian macroeconomics mentions, that the solution to a recession is on account of the…

Q: Which of the following is a Keynesian approach for dealing with a recession?  a) Raise interest…

A: The Keynesian approach to dealing with a recession is expansionary fiscal policy. Expansionary…

Q: a) Distinguish between the classical and the Keynesian aggregate supply curve

A: Aggregate supply curve: it shows the relationship between the amount of output supplied by firms at…

Q: When real GDP declines during a recession, what typically happens to consumption, investment, and…

A: Recession refers to the situation of lower economic activity. During recession times, economic…

Q: What would the LM curve look like in a classical world? If this really were the LM curve that  we…

A: Economics as a subject deals with the allocation of scarce resources among humans with unlimited…

Q: According to Keynesian business cycle theory, what should the government do in response to a…

A: The business cycle refers to the continuous ups and downs in the level of economic activity that…

Q: Suppose that an economy is currently in its long run equilibrium. Suppose that the government…

A: Aggregate demand (AD) refers to the total planned expenditure which all the sectors of the economy…

Q: Over the business cycle, investment spending GDP. a. is more volatile than b. is inversely…

A: Business cycles can be termed as series of expansion and contraction of economic activity. Expansion…

Q: The new Keynesian theory of the business cycle stresses intermporal substitution True False

A: In this question, ignore new classical economists who propose real business cycle theory.   On the…

Q: A number of countries, like Greece and the United Kingdom, have in the past few years responded to…

A: The government when undertakes an austerity policy by cutting its own expenditure and also…

Q: Using the AD/AS model construct two graphs that show how a recession can occur? Explain how…

A: A recession is a time of declining economic execution across a whole economy that goes on for a long…

Q: With the aid of a diagram and using the Keynesian analysis, explain in detail how income and…

A: Keynesian analysis suggested that best way to move an economy out of recession was to increase…