Economics: Private and Public Choice (MindTap Course List)
15th Edition
ISBN: 9781285453538
Author: James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher: Cengage Learning
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Chapter 14, Problem 12CQ
To determine
Identify the major cause of the business cycle.
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Who is John Maynard Keynes? What time period did he write? What did he believe about the market’s ability to recover from a recession?
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In the Keynesian model (that is, the short run), what causes recessions?
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Economics: Private and Public Choice (MindTap Course List)
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- What were John Maynard Keynes views of the causes of recessions and solutions to fixing them?arrow_forwardAccording to the classical perspective (the one from the 19th century that I described at the beginning of my first lecture video), what kinds of things could cause recessions or other economic downturns?arrow_forwardWhat was Keynes’s solution to the Depression?arrow_forward
- Question 5. What is the name of Keynesian book published in 1936?arrow_forwardSuppose you are an advisor to the Business Cycle Dating Committee. You are asked to look at macroeconomic data to evaluate whether the economy has entered a recession this year. Which data do you look at? How does the economy behave at the onset of a recession? Explain how unemployment changes over the business cycle. Why do these changes occur?arrow_forwardFill in the blank. ALEX: Hi, Becky. I’m intrigued to see how macroeconomics allows us to explain recent economic events such as the Great Recession that affected so many people. But there’s one thing I don’t understand. Was the collapse of the housing bubble the only cause of the recession, or were there other factors as well? BECKY: Hi, Alex. I agree that macroeconomic theory offers an entirely new perspective on how the economy works. To answer your question, the crash of the housing market was a major factor but not the only cause of the Great Recession. The professor mentioned that the __________ (options: financial, fiscal, government) system deteriorated as well, an event that deepened the economic downturn even further. ALEX: I see. So the bursting of the housing bubble caused the initial decline in aggregate demand. Then the financial crisis caused aggregate demand to decline even more. Could you also help me understand how to use the aggregate demand and aggregate supply model…arrow_forward
- Define what economists mean when they use the word: “recession”?arrow_forwardEmpirical studies indicate that the long-run trend in real GDP of the USA has an upward trend. How is this possible given business cycles and macroeconomic fluctuations? What factors explain the upward trend despite the cycles?arrow_forwardThere are two theories regarding the cause of recessions. Between the two, which one contributes more to it? Explain thoroughly. Provide examples when necessary.arrow_forward
- When real GDP declines during a recession, what typically happens to consumption, investment, and the unemployment rate? During an economic boom, what happens to these variables?arrow_forwardThe level of potential GDP for the US in the Growth Cycle model was assumed by most analysts to be 3.5% in the late 1990s and the early 2000s. Now it is estimated that potential is only 1.8 - 2.0%. What are some possible reasons for decline in potential GDP?arrow_forwardMacroeconomic policy is concerned with the operation of the economy as a whole. In broad terms, the goal of macroeconomic policy is to provide a stable economic environment that is conducive to fostering strong and sustainable economic growth, on which the creation of jobs, wealth and improved living standards depend. ?" https://www.aph.gov.au/About Parliament/Parliamentary Departments/Parliamentary Library/pubs/BriefingBook44p/ Which one of the following is NOT an objective of macroeconomic policy? A. To reduce unemployment. O B. To stabilise the price of maize. O C. To bring or keep inflation under control. O D. To increase the rate of economic growth.arrow_forward
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