Principles of Macroeconomics 2e
2nd Edition
ISBN: 9781947172388
Author: Steven A. Greenlaw; David Shapiro
Publisher: OpenStax
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Textbook Question
Chapter 13, Problem 16RQ
If the economy is suffering through a rampant inflationary period, would a Keynesian economist advocate for stabilization policy that involves higher taxes and higher interest rates? Explain your answer.
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If the economy is suffering through a rampant inflationary period, would a Keynesian economist advocate for stabilization policy that involves higher taxes and higher interest rates? Explain your answer.
Why would a Keynesian policy response not make much sense in response to a minor recession like the one that occurred in 1990?
Please make response as simple as possible.
Effectiveness of anti-inflationary policies in conditions of adverse supply shocks.
Chapter 13 Solutions
Principles of Macroeconomics 2e
Ch. 13 - Do rational expectations tend to look back at past...Ch. 13 - Legislation proposes that the government should...Ch. 13 - Would it make sense to argue that rational...Ch. 13 - Summarize the Keynesian and Neoclassical models.Ch. 13 - Does neoclassical economics focus on the long term...Ch. 13 - Does neoclassical economics view prices and wages...Ch. 13 - What shape is the long-nm aggregate supply curve?...Ch. 13 - What is the difference between rational...Ch. 13 - A neoclassical economist and a Keynesian economist...Ch. 13 - Do neoclassical economists tend to focus more on...
Ch. 13 - Do neoclassical economists tend to focus more on...Ch. 13 - Do neoclassical economists see a value in...Ch. 13 - If aggregate supply is vertical, what role does...Ch. 13 - What is the shape of the neoclassical long-run...Ch. 13 - When the economy is experiencing a recession, why...Ch. 13 - If the economy is suffering through a rampant...Ch. 13 - If most people have rational expectations, how...Ch. 13 - Explain why the neoclassical economists believe...Ch. 13 - Economists from all theoretical persuasions...Ch. 13 - Is it a logical contradiction to be a neoclassical...Ch. 13 - Use Table 26.3 to answer the following questions....
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Similar questions
- In what way can inflation distort purchasing power over time for individuals?arrow_forwardSuppose an economy has a high rate of unemployment and a high rate of inflation. What kind of policy measures would you suggest to fight inflation and increase employment?arrow_forwardWhat is the difference between the Keynesian and rational expectation theories concerning the success of stabilization policy?arrow_forward
- Many central banks now indicate that their primary objective is to keep inflation at a persistently low rate. If the rate of inflation is persistently low, will this help reduce the instability of the business cycle? Why or why not?arrow_forwardWhy might a Keynesian Economist argue that a Federal Reserve policy alone will not get us out of a recession? ( explain in full response)arrow_forwardDiscuss the basic principles of the New Keynesian Economics and how it addresses perceived limitations to classic Keynesian theory.arrow_forward
- One practical limitation with Keynesian economics is the challenge of implementing active economic policy quickly. How severe is this problem and why? What is one example?arrow_forwardKeynesian economics defends budget balance. However, according to economists, budget balance may exacerbate the effects of the business cycle. Isn't it also a Keynesian view to use discretionary policy to smoothen the business cycles? Aren't those two views contradictory?arrow_forwardIn 2010 the Greek government had to inform the European Commission on how it would control its budget deficit and improve the performance of its economy. The government’s debt is so high that agencies assessing the creditworthiness of the government downgraded it (which would mean more interest has to be paid to raise finance). Proposals were likely to include a 10% cut in government spending. What actions can the government take to increase national income growth in Greece? If the Greek economy is in recession what would you expect to be the effect on: a) Inflation? b) Unemployment? c) Imports? Explain your answers.arrow_forward
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