Which theory states that people make decisions based on information they've gathered? A. Life-cycle theory B. Theory of rational expectations C. Keynesian theory D. Theory of adaptive expectations
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- Define “time inconsistency” of economic policy? b) Examine why policy makers might be tempted to renege on an announcement they made earlier? In this situation, what is the advantage of a policy rule?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?Summarize the Keynesian and Neoclassical models.
- 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?“Anytime it is snowing when Joe Commuter gets up inthe morning, he misjudges how long it will take him todrive to work. When it is not snowing, his expectationsof the driving time are perfectly accurate. Consideringthat it snows only once every ten years where Joe lives,Joe’s expectations are almost always perfectly accurate.”Are Joe’s expectations rational? Why or why not?Economics what is the rational expectations, representative agent model, and why is it useful in the study of macroeconomics. ?
- 1. The traditional economic (the Neoclassical view) approach to behavior suggests that: A. employees will always want to do a good job. B. managers may or may not assume that individuals are happy in the workplace. C. managers should assume that employees are there only for a paycheck. D. managers can motivate desired behavior by establishing appropriate incentives. E. all the above.Do rational expectations tend to l ook back at past experience while adaptive expectations look ahead to the future? Explain your answer.Explain the differences and similarities between Neoclassical Growth and New Keynesian models based on:1. Economic Actors2. Assumption of Market Type
- b) What differences emerge between Keynesian and Classical economists regarding understanding the business cycle and how the economy should best be managed? c) Present an argument where you express support for either a Keynesian approach OR a Classical approach. You should make a case in arguing for only ONE of these two different approaches and use real-world example.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 pricesDefine the neoclassical economic theory. List and explain it's main assumptions.