Keynes believed that an increase in government expenditure during a recession would not result in significant inflation because he assumed that: Answers: A. Aggregate demand was vertical during a recession. B. The market would self-adjust to reach full employment. C. Aggregate supply was horizontal during a recession. D. The government would impose price ceilings during a recession.

Keynes believed that an increase in government expenditure during a recession would not result in significant inflation because he assumed that: Answers: A. Aggregate demand was vertical during a recession. B. The market would self-adjust to reach full employment. C. Aggregate supply was horizontal during a recession. D. The government would impose price ceilings during a recession.

MACROECONOMICS FOR TODAY

10th Edition

ISBN:9781337613057

Author:Tucker

Publisher:Tucker

Chapter10: Aggregate Demand And Supply

Section10.7: Cost-push And Demand-pull Inflation Revisited

Problem 1YTE

See similar textbooks

Similar questions

To fight recession, a Keynesian economist would: (Select all that apply) A. Increase Taxes B. Decrease Taxes C. Increase Government Spending D. Decrease Government Spending
Keynes believed that economies experiencing high unemployment should adopt policies to reduce the money supply. reduce government expenditures. increase aggregate demand. increase aggregate supply.
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.
Defend or Refute. “John Maynard Keynes rejected the theory of classical economics that there will be an automatic adjustment in the economy when there is a deviation in the economy from full- employment. Keynes added that the government should intervene in the economy by spending more to induce the income and spending of the people”. Explain your position.
Keynesian economics predicts that if government policy makers deem current equilibrium real Gross Domestic Product (GDP) to be "too low," then an appropriate policy action would be to do nothing, because the economy is self-adjusting. raise government spending, thereby increasing aggregate demand and pushing up real Gross Domestic Product (GDP) with little or no inflationary consequences. increase taxes, thereby causing aggregate demand to increase and inducing a rise in real Gross Domestic Product (GDP) with little or no inflationary consequences. reduce the money stock, thereby causing aggregate demand to decrease and inducing a rise in fall in the price level that generates an increase in total planned expenditures.
The keynesian school of thought argues that during a recession… a) Governments should reduce spending and increase taxes b) Governments should increase spending and reduce taxes c) Government should increase spending and increase taxes d) Government should reduce spending and reduce taxes.
In the Keynesian framework, which of the following events might cause recession/inflation. Explain using the Aggregate Demand/Aggregate Supply. I only need type of examples that go with the question though. (Examples are crucial please!) 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
In the “real world” prices are not fixed, and hence the aggregate supply curve is not completely horizontal with a slope of zero. In order to illustrate why it is that aggregate supply curves slope up and to the right, Keynes made two crucial assumptions about the operation of the labor market. What were those two assumptions?
Suppose the economy is experiencing a recession with high unemployment. With a goal of increasing GDP back to the full employment level:1. what would a liberal economist suggest policy makers do as the correct course of action? (think of those that may align their thinking to that of Keynes)2. what would a conservative economist suggest policy makers do as the correct course of action? (think of those that may align their thinking to that of Say)
(47). If the federal budget were balanced annually O. monetary policy would become the chief tool for achieving economic stability O. the money rule could not be implemented O. business cycles would be virtually eliminated O. fiscal policy would become the chief tool for achieving economic stability (52). Listen Keynes believed that the money supply played a minor role, if any, in causing changes in the business cycles. O. True O.False
Keynes advocated the use of fiscal and monetary policy to stabilize an economy? When are the effects of these policies most beneficial? Select all that apply. Select one or more: In the short run When the economy is operating at full employment When the economy is operating significantly above full employment When the economy is operating significantly below full employment In the long run
According to Keynesian views, what is government's role when it comes to the U.S. economy? a. The government has a responsibility to manage the economy. b. The government has a responsibility to follow a hands-off approach with the economy. c. The government has a responsibility to monitor the economy but not meddle with it.