Macroeconomics
13th Edition
ISBN: 9781337617390
Author: Roger A. Arnold
Publisher: Cengage Learning
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Question
Chapter 16, Problem 8QP
To determine
The reliability of wage price flexibility.
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Keynesian 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?
Why Keynesian economics become popular back in 1930’s. Do you think that during 2005-08 financial crisis, Keynesian 1930 solution work for the economy? 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?
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Chapter 16 Solutions
Macroeconomics
Ch. 16.2 - Prob. 1STCh. 16.2 - Prob. 2STCh. 16.2 - Prob. 3STCh. 16.3 - Prob. 1STCh. 16.3 - Prob. 2STCh. 16.3 - Prob. 3STCh. 16.5 - Prob. 1STCh. 16.5 - Prob. 2STCh. 16 - Prob. 1QPCh. 16 - Prob. 2QP
Ch. 16 - Prob. 3QPCh. 16 - Prob. 4QPCh. 16 - Prob. 5QPCh. 16 - Prob. 6QPCh. 16 - Prob. 7QPCh. 16 - Prob. 8QPCh. 16 - Prob. 9QPCh. 16 - Prob. 10QPCh. 16 - Prob. 11QPCh. 16 - Prob. 12QPCh. 16 - Prob. 13QPCh. 16 - Prob. 14QPCh. 16 - Prob. 15QPCh. 16 - Prob. 1WNGCh. 16 - Prob. 2WNGCh. 16 - Prob. 3WNGCh. 16 - Prob. 4WNGCh. 16 - Prob. 5WNG
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- The Great Depression undermined the credibility of the classical view. Correspondingly, the high rates of inflation and unemployment during the 1970s undermined the Keynesian view. Can you explain why both of these phenomena occurred?arrow_forwardWhat is the philosophical, economic essence of Keynesian doctrine or “Keynesianism” that emerged from the experience and attempted explanations of the Great Depression ? What would all Keynesians believe, in order to be “Keynesian?”arrow_forwardThe Keynesian theory was first introduced in 1936. Why was it presented at that time, and what policy implications did it have?arrow_forward
- In recent years, the US and few developed countries have interest rates falling to very low levels. Explain this situation according to Keynesian theory.arrow_forwardThe two principles that make a person a “Keynesian” consist of the ideology that the private economy may not reach full employment and that government spending can spur the economy into filling the gap. Give two examples that may be applied to the real world.arrow_forwardFrom 1990 to 1995, the U.S. economy was in a recessionary gap. According to the classical economists, which of the following should have occurred? Group of answer choices interest rates should have fallen which would increase consumer and investment spending prices should have fallen which would increase consumer spending all of the above should have occurred wages should have fallen which would cause more workers to be hiredarrow_forward
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