Which of the following policies would Keynesian economists recommend to help lower the rate of unemployment? a) All of the choices are correct  b) Decreases taxes on households  c) Increase government spending  d) Increase the money supply  e) Decrease business taxes

Q: If output is below its natural rate, there will be pressure for wages to __________ because…

A: Unemployment is a situation that occurs when workers want to work but are unable yo find employment,…

Q: In the Keynesian framework, which of the following events might cause inflation? Group of answer…

A: In the Keynesian framework, any change in the market demand and supply will lead to influence the…

Q: Which of the following statements of fact about the role of the Canadian government in the economy…

A: Keynesian economists legitimize government mediation through open arrangements that expect to…

Q: For a country, economists have estimated that structural unemployment is 2.0% and Frictional…

A: When the actual rate of unemployment is equal to natural rate of unemployment, the economy is at…

Q: Within the Keynesian cross, the adjustment towards equilibrium occurs through: A. interest rates. B.…

A: Aggregate expenditures is defined as the total amount that households and firms plan to spend on…

Q: Which of the following policies would Keynesian economists recommend to help lower the rate of…

A: Keynesian Economics suggests that there should be active government intervention to correct the…

Q: There is a predictable negative relationship between the output gap and the unemployment rate but it…

A: Quantity theory of money says mv= pt    which means price level in the Economy is proportional to…

Q: In the simple Keynesian framework, the price level ___ in the short run. A.is fixed B.is…

A: The Keynesian model explains that the equilibrium price level is the result of the intersection…

Q: The alleged statistical relationship between the inflation and unemployment rates is most usually…

A: According to the Bureau of labor statistics(BLS), an individual is considered unemployed if he does…

Q: According to early classical macroeconomics, unemployment

A: Unemployment is referred to as a situation which occurs when individuals or workers who want to work…

Q: A Neo-Keynesian economist is LEAST likely to believe that: A. 'Big government' is usually good for…

A: In economics, Keynesian economics refers to the one of the economic school of thoughts that beleives…

Q: An economy’s natural rate of unemployment is the a.        economy’s long-run target level of…

A: The natural rate(e) of unemployment is the least level that a solid/healthy economy can sustain…

Q: In recent years, the US and few developed countries have interest rates falling to very low levels.…

A: Answer - Need to find- In recent years, the US and few developed countries have interest rates…

Q: Provide a Keynesian analysis on the linkage between inflation and employment. Discuss the tools…

A: The economies operate with the help of the economic activities which various entities in the economy…

Q: In the following question: Pick the right answer and fully explain why this is the correct answer…

A: Frictional unemployment occurs when a person changing from one job to another for different reasons.…

Q: Keynesian theory suggests that in the short run _________ a prices fluctuate significantly. b wages…

A: Keynesian theory suggests that in the short run wages and prices are sticky, meaning that they do…

Q: Which of the following policies would Keynesian economists recommend to help lower the rate of…

A: Keynesian Economics suggests that there should be active government intervention to correct the…

Q: Which of the following is best represented by the Circular Flow Diagram? A) Growth equals Inflation…

A: Circular flow of diagram shows how households sector provides factors of production to the business…

Q: When the output gap is positive (an inflationary gap), the unemployment rate is below the natural…

A: Unemployment rate is defined as the proportion of the labor force that is not employed or not…

Q: Show and explain the existence of involuntary unemployment in the labor market by using the…

A: The Efficiency Wage Theory postulates that firms can increase productivity by increasing wages. This…

Q: In the basic New Keynesian model. suppose that the anticipated future rate of inflation goes up due…

A: The basic new Keynesian model beleives in the change sin aggregate demand, which further lead to…

Q: According to Keynes, nominal wage increases mostly and directly lead to a inflationary development a…

A: Inflation: - Inflation is the phenomenon of an increase in the prices of goods and services in an…

Q: Assume that the federal government increases unemployment compensation, which of the following is…

A: if federal government increases unemployment compensation,then it decreases the unemployment level.…

Q: Why might a Keynesian Economist argue that a Federal Reserve policy alone will not get us out of a…

A: Recession explains the market situation when the whole country is facing a downturn in aggregate…

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: To say that solving the unemployment problem requires government intervention is consistent with the…

A: To combat inefficiencies, governments intervene in markets. Resources are correctly allocated to…

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: Which of the following is the impulse in the Keynesian business cycle A change by the Fed in the…

A: In Keynesian business cycle, impulse is firms expectations.

Q: How do economists define unemployed workers? Group of answer choices Although currently working,…

A: Labor Force include two types of workers-Employed workers and unemployed workers.

Q: Explain how demand-pull inflation is caused when the economy is at, or near, full employment in the…

A: The LRAS is the vertical supply curve which shows that in long run, the economy is at the full…

Q: explain the basic principles of the New Keynesian Economics and how it addresses perceived…

A: NEW KEYNESIAN THEORY:    New keynesian theory was developed with the view that price and wages are…

Q: According to the Keynesian model, demand shocks affect output in the short run because:…

A: The Keynesian View of the AD–AS Model uses an AS curve which is horizontal at levels of output below…

Q: In a Keynesian framework, which of the following government policy choices offer a possible solution…

A: In the recession, economic activities go down due to the decrease in purchasing power. Moreover,…

Q: Given the information in the extract, the Simple Keynesian Macroeconomic Model concludes the…

A: The primary premise of this school of thought is that government intervention can stabilise the…

Q: Discuss the basic principles of the New Keynesian Economics and how it addresses perceived…

A: Economy: Economy might be characterized as the scope of a country's monetary exercises. Such…

Q: Use the Keynesian transmission mechanism to explain fully each of the steps whereby an Easy money…

A: Keynesian economists believe that government intervention is required to correct disequilibrium in…

Q: What portions of Keynesian economic theory have the most merits?

A: Keynesian economic theory is developed by John Keynes. He emphasizes on the government intervention…

Q: Suppose to get re-elected, an incumbent government wants to continuously expand the economy so that…

A: High growth of economy implies increase in profitability for the firms, in turn enabling more…

Q: A key difference between the original Keynesian and New Keynesian approaches to the labour market ,…

A: The Keynesian model would be the earlier model in which Keynesian attempts to explain the aggregate…

Q: During the severe economic downturn during the great recession the federal government provided an…

A: Recession: - it is an economic condition where the overall economic activity declines in an economy.

Inflation and Purchasing Power Theory

In economic terms, Inflation refers to the increase in the costs of various commodities which are used in daily lifestyle like food, clothes, transport, etc. over a specific time. It may lead to a fall in the purchasing power of the people and also affects the exchange rate of the currency because of the price increase. As the purchasing power falls the unit of the currency in the economy falls. When the prices of the commodities are decreased, then the purchasing power of the consumers will rise, then it will lead to deflation and changes the currency of the base economy to that of the foreign economy which will lead to change in exchange rates.