Neoclassical perspective is a- re sisitation of classical econolics, which states that short run dynamica of the economy dissipate very quicly due to inflexible porices. b- revisitation of classical eonomics, which statets that long run fynamics of the economy dissipate slowlllly due to inflexibilyti prices d- re visitation of classical economics which states that short run dynamics of the economy dissipate very quickly due to felexible prices

Neoclassical perspective is a- re sisitation of classical econolics, which states that short run dynamica of the economy dissipate very quicly due to inflexible porices. b- revisitation of classical eonomics, which statets that long run fynamics of the economy dissipate slowlllly due to inflexibilyti prices d- re visitation of classical economics which states that short run dynamics of the economy dissipate very quickly due to felexible prices

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter26: The Neoclassical Perspective

Section: Chapter Questions

Problem 19CTQ: Economists from all theoretical persuasions criticized the American Recovery and Reinvestment Act....

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In an economy, if structural unemployment decreases while theother types of unemployment remain unchanged, then (circle theletter representing the right answer below)A) the natural rate of unemployment and potential GDP willremain unchanged.B) the natural rate of unemployment and potential GDP will bothdecrease.C) the natural rate of unemployment will increase and potentialGDP will decrease.D) the natural rate of unemployment will decrease and potentialGDP will increasef) In words, discuss the limitations of the neoclassical analysiswith respect to closing a recessionary gap.
The neoclassical consumption model, a retirement perspective: Consider thespecial case solved in the text where ! = 1 and utility takes the log form.Suppose the real interest rate is 5 percent. Let’s give this consumer a fnancial profle that might look like that of a middle-aged college professor contem-plating retirement: initial assets are ftoday = $50,000, and the path for labor income is ytoday = $100,000 and yfuture = $10,000.(a) What is the individual’s human wealth? Total wealth?
Explain why the neoclassical economists believethat the government does not need to do much aboutunemployment. Do you agree or disagree? Explain.
Based on the neoclassical economics, when AD, aggregate demand goes down, in the long run, there will be: An increase in prices and an increase in output O An increase in prices and a return to potential GDP O A decrease in prices and a return to potential GDP O A decrease in prices and a decrease in output
In the Teenaged Neoclassical Model (akin to Ramey's neoclassical framework), government purchases (G) are presumed to be intrincally useless; one example might be military spending in a country without foreign enemies. In the TNM, when government purchases rise, what happens to GDP (Y) and to subjective well-being (U)? Y rises, U falls. Y falls, U falls. Y rises, U rises. Y falls, U rises.
Define the neoclassical economic theory. List and explain it's main assumptions.
Economists from all theoretical persuasions criticized the American Recovery and Reinvestment Act. The Stimulus Package was arguably a Keynesian measure so why would a Keynesian economist be critical of it? Why would neoclassical economists be critical?
1. Supply and demand in the neoclassical economy Consider an economy in which the consumption, investment and production functions are as follows. C = 90 + 0.7(Y − T) I = 250 − 20r F(K, L) = AK0.5L0.5 The capital and labor supply are equal to 100 each, A=10, G = 200 and T = 200. Compute the equilibrium values of output, overall labor income, consumption, public savings, national savings, investment, and the interest rate. Suppose now government spending increases to G=300 (everything else stays the same). What happens to output, consumption, savings, investment and the interest rate? Compute the new values for these variables.
1Why low rate inflation is considered necessary for economic grwoth? Oa It does not affect the purchasing power of wages Ob. It indicates that the currency is in continuous demand by the people Oc taffects only the rich and not the poor Od itact as an incentive to boost in supply in the economy 2When the economy is in Keynesian macroeconomic equilibrium, planned investment is greater than actual investment. O a False O b. True 3Government fixes the floor and ceiling price which will not allow the producers to increase the price on their wish, this is a type of. O a Physical control called price pegging O b. Monetary policy control measures O. Physical control called price tagging Od. Fiscal policy control measures O e None 4Rising output coupled with falling prices is called stagflation O a. False O b. True 5The Value of marginal propensity to consume lies O a. O to 1 O b. Less than zero Oc -1 to 1 Od. Between O to 1 6The Central Bank way to control inflation is Oa Monetary policy…
Is Keynesian economics relevant in today's new normal? In what way? Explain...
4Consider a baseline long run equilibrium where output is 22 trillion dollars, and the price level is 100. Note: In the Long Run Steady State Equilibrium, Price expectation is the same as price level & unemployment is 5% or lower. None of these are guaranteed in the short run. Usually, short run equilibrium is called an underemployment equilibrium.Starting from the baseline, suppose COVID 19 hits this economy. If this disease only makes workers sick (everything else remaining constant) A Keynesian Macroeconomist proposes the use of a massive expansionary fiscal policy. Step 1) What will be the shape of the Phillips Curve (Upward / Downward/ Vertical/Horizontal). I want you to think about what variable is measured on the horizontal axis of the Phillips Curve Graph and what variable is measured in the Phillips Curve Vertical axis. Then tell us what it means to say that Phillips Curve is upward or downward sloping or vertical or horizontal Step 2) why did this policy create a…
Specific Subject: Macroeconomics - Basic Neoclassical Model This problem indicated At (exogenous variable represents as Technology as looks at Cobb-Douglas production functions). This problem indicated At (exogenous variable represents Technology as can be seen in various Cobb-Douglas type production functions).Then, the objective is to model 2 graphs considering 2 labour offers - one relatively elastic and the other inelastic -, and to analyse the effects of variables such as Yt (output), rt (interest rate), wt (nominal wage) and Nt (labour) and how they are impacted by these offers and thus explain what happens to the real wage. This problem was sent 2 times, but due to the complexity it was rejected. I urgently need a resolution.