MACROECONOMICS FOR TODAY
10th Edition
ISBN: 9781337613057
Author: Tucker
Publisher: CENGAGE L
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Chapter 16.A, Problem 5SQ
To determine
The Keynesian approach to the recessionary gap in the economy.
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Economist who generally empgasize the importance of aggregate supply in determining the size of the macroeconomiy over the long run
a- says law
b-Neoclassical economists
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dk- Neoclassical zone
1.) The Keynesian AD-AS model describes what happens with price levels when aggregate demand increases. Could you find any evidence from the last ten-fifteen years that might support AD-AS model descriptions of demand-pull inflation, cost-push inflation, and recession? For example, you could find data on the GDP’s of any two countries from 2000 to 2017 to support your findings.
2.) In macroeconomics, the immediate short run is known as a length of time when both input prices and output prices are fixed. In the short-run, input prices are fixed but output prices are variable. In the long run, input prices and output prices can vary.
What happens in the immediate short-run when AD falls from AD to AD2 to the price level and output?
What happens in the short-run when AD falls from AD to AD2 to the price level and output?
What will happen in the long-run?
Which of the following is false?
a. If people can anticipate the plans of policymakers and alter their behavior quickly, their behavior could neutralize the intended impact of government action on real GDP.
b. The theory of rational expectations leads to optimistic conclusions regarding macroeconomic policy’s ability to achieve its intended economic goals.
c. Rational expectations economists believe that wages and prices are flexible, and that workers and consumers incorporate the likely consequences of government policy changes quickly into their expectations.
d. Catching consumers and businesspeople off-guard with macroeconomic policy changes gets harder the more you try to do it.
e. None of the above is false; all are true.
Chapter 16 Solutions
MACROECONOMICS FOR TODAY
Ch. 16.3 - Prob. 1.1YTECh. 16.3 - Prob. 2.1YTECh. 16.3 - Prob. 2.2YTECh. 16.A - Prob. 1SQPCh. 16.A - Prob. 2SQPCh. 16.A - Prob. 3SQPCh. 16.A - Prob. 4SQPCh. 16.A - Prob. 1SQCh. 16.A - Prob. 2SQCh. 16.A - Prob. 3SQ
Ch. 16.A - Prob. 4SQCh. 16.A - Prob. 5SQCh. 16.A - Prob. 6SQCh. 16.A - Prob. 7SQCh. 16.A - Prob. 8SQCh. 16.A - Prob. 9SQCh. 16.A - Prob. 10SQCh. 16.A - Prob. 11SQCh. 16.A - Prob. 12SQCh. 16.A - Prob. 13SQCh. 16.A - Prob. 14SQCh. 16.A - Prob. 15SQCh. 16 - Prob. 1SQPCh. 16 - Prob. 2SQPCh. 16 - Prob. 3SQPCh. 16 - Prob. 4SQPCh. 16 - Prob. 5SQPCh. 16 - Prob. 6SQPCh. 16 - Prob. 7SQPCh. 16 - Prob. 8SQPCh. 16 - Prob. 9SQPCh. 16 - Prob. 10SQPCh. 16 - Prob. 11SQPCh. 16 - Prob. 12SQPCh. 16 - Prob. 1SQCh. 16 - Prob. 2SQCh. 16 - Prob. 3SQCh. 16 - Prob. 4SQCh. 16 - Prob. 5SQCh. 16 - Prob. 6SQCh. 16 - Prob. 7SQCh. 16 - Prob. 8SQCh. 16 - Prob. 9SQCh. 16 - Prob. 10SQCh. 16 - Prob. 11SQCh. 16 - Prob. 12SQCh. 16 - Prob. 13SQCh. 16 - Prob. 14SQCh. 16 - Prob. 15SQCh. 16 - Prob. 16SQCh. 16 - Prob. 17SQCh. 16 - Prob. 18SQCh. 16 - Prob. 19SQCh. 16 - Prob. 20SQ
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Similar questions
- 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?arrow_forwardIn the Keynesian framework, which of the following events might cause a recession? Which might cause inflation? Sketch AD/AS diagrams to illustrate your answers. A large Increase In the price of the homes people own. Rapid growth in the economy of a major trading partner. The development of a major new technology offers profitable opportunities for business. The Interest rate rises. The good imported from a major trading partner become much less expensive.arrow_forwardIn the Keynesian framework, which of the following events might cause recession/inflation. Explain using the Aggregate Demand/Aggregate Supply with examples. (Examples are crucial please!) d. The interest rates rises e. The good imported from a major trading partner becomes much less expensivearrow_forward
- In the Keynesian model, if there is a sudden rise in the aggregate demand curve, in the short run, it will cause a inflation b deflation c increase in output d a and carrow_forwardAggregate Supply: Explain whether the economy is currently operating in the Keynesian, intermediate or neoclassical portion of the economy's aggregate curve. Also, point out a time when the economy may have been operating at another portion of the aggregate supply curve.arrow_forwardA. Illustrate and explain the impact that changes in the money supply have in the economy through a neoclassical perspective. B. Illustrate and explain the impact that changes in the money supply have in the economy through a Keynesian perspective.arrow_forward
- State with the brief reas whether following statements are true or false. (A) The Classical economics believed that if there were employment in an economy it would tend to be eliminated by a fall in the price level. (B) Stagflation is caused by a leftward shift in the aggregate demand curve. (C) Labour Force shifts the Short run aggregate supply curve but not the long run aggregate supply curve. (D) CPI and GDP deflator tell tge similar story about inflation. (E) Macroeconomics never propose to eliminate unemployment.arrow_forwardc. If aggregate demand shifts right, what is equilibrium output? d. if aggregate demand shifts left, what is equilibrium output?arrow_forwardNo written by hand solution An economist needs to predict the real wage rate, employment, output, real interest rate, consumption, investment, and price level. The economy is hit with a shock, which the economist thinks is a temporary adverse supply shock. (a) If you were the economist, what would be your forecasts for each of the variables listed above (rise, fall, and no change) in general equilibrium? (b) What if the shock was due to people's reduced expectations about their future income? Which variables did you forecast correctly, and which did you forecast incorrectly in part (a)?arrow_forward
- Comment, on the likely outcome with sufficient arguments? a) Impact on aggregate demand of the economy if imports are greater than exports.b) Impact on aggregate demand if the GDP of trading partner is increasing at a faster rate than that of India.c) Inflation rate in the country has reached 6.73%.arrow_forward(47). If the federal budget were balanced annually O. monetary policy would become the chief tool for achieving economic stability O. the money rule could not be implemented O. business cycles would be virtually eliminated O. fiscal policy would become the chief tool for achieving economic stability (52). Listen Keynes believed that the money supply played a minor role, if any, in causing changes in the business cycles. O. True O.Falsearrow_forwardThe business cycle occurs because A. the government is constantly trying to produce an inflationary gap, but expenditures in the economy cannot keep pace with the government's agenda B. aggregate demand and short-run aggregate supply fluctuate, but the money wage rate does not adjust quickly enough to keep real GDP at potential GDP C. potential GDP is increasing, and increases in aggregate demand cannot keep pace with increases in long-run aggregate supply D. the Bank of Canada is constantly increasing the quantity of money.arrow_forward
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