Economics For Today
10th Edition
ISBN: 9781337613040
Author: Tucker
Publisher: Cengage Learning
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Chapter 18, Problem 5SQ
To determine
The book published by JM Keynes.
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Consider the neo-classical approach to macroeconomics. What does that theory suggest will happen when there is a recession?
Group of answer choices
a. Wages will decrease
b.Wages will increase
c. Government should spend less money
d. Government should spend more money
According to classical macroeconomic theory andmonetary neutrality, changes in the money supply affecta. the unemployment rate.b. real GDP.c. the GDP deflator.d. none of the above
Keynesian Assault on Classical Economics: Why did a drastic change in the economic atmosphere of the time lead Keynes to use the word, “nincompoops,” to describe the classical economists & their followers? Explain.
Chapter 18 Solutions
Economics For Today
Ch. 18.4 - Prob. 1YTECh. 18 - Prob. 1SQPCh. 18 - Prob. 2SQPCh. 18 - Prob. 3SQPCh. 18 - Prob. 4SQPCh. 18 - Prob. 5SQPCh. 18 - Prob. 6SQPCh. 18 - Prob. 7SQPCh. 18 - Prob. 8SQPCh. 18 - Prob. 9SQP
Ch. 18 - Prob. 1SQCh. 18 - Prob. 2SQCh. 18 - Prob. 3SQCh. 18 - Prob. 4SQCh. 18 - Prob. 5SQCh. 18 - Prob. 6SQCh. 18 - Prob. 7SQCh. 18 - Prob. 8SQCh. 18 - Prob. 9SQCh. 18 - Prob. 10SQCh. 18 - Prob. 11SQCh. 18 - Prob. 12SQCh. 18 - Prob. 13SQCh. 18 - Prob. 14SQCh. 18 - Prob. 15SQCh. 18 - Prob. 16SQCh. 18 - Prob. 17SQCh. 18 - Prob. 18SQCh. 18 - Prob. 19SQCh. 18 - Prob. 20SQ
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- Think back to August 6, 1945. The United States has just dropped an atomic weapon on the city of Hiroshima killing tens of thousands of Japanese and devastating the infrastructure. A Keynesian at that time might conclude that there is a silver lining in the destruction, as economic prosperity will result. Evaluate the logic of this claim in a few sentences.arrow_forwardWrite a word defense of either the Keynesian perspective or the Neoclassical perspective of economics. Which worldview makes the most sense? You are encouraged to relate your explanation to specific examples, politics, the fashion industry, your own life, etc.arrow_forwardE2 The classical economist’s solution to the Great depression was A) reduce the wage rate, B) increase aggregate demand, C) increase the money supply. Explain your choice. The Keynes major problem with the classical model was that: A) it focused too much on money, B) it was a short run model, C) it lacked a reasonable disequilibrium adjustment mechanism. Explain your choice.arrow_forward
- What 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_forwardWhich of the following statements is inconsistent with Classical Theory? A.The economy will eventually produce at the full-employment level of output. B.The economy is self-regulating. C.The economy has an environment of “invisible hand”. D.The economy has inflexible wages and prices.arrow_forwardIn Keynesian-cross model, Keynesian argue that economy has a potential to attain any equilibrium. Therefore government intervention is desirable. T/F? Explain your answerarrow_forward
- Outline the 9 assumptions of classical theory and explain each assumption.arrow_forwardA friend of yours (who has not taken macroeconomics) has just read that Keynesian theory represented a direct attack on Classical theory. They don't understand either theory and knows you (having just taken macroeconomics) are well-versed in both. They ask you to explain the basic differences between how Keynes and the Classics understood the business cycle and their respective policy prescriptions. Your answer should probably include: a) a basic explanation of what full-employment GDP means and how it relates to the stability condition S=| (or, equivalently, leakages = injections); b) an explanation of why the Classicals believed that any movement away from full-employment GDP would be quickly fixed/reversed; c) an explanation of why Keynes thought the Classicals* "auto-correcting" story was problematic, i.e., a detailed explanation of Keynes' multiplier concept (how did Keynes believe a recession would unfold (step-by-step) and why did he believe it could persist); d) an explanation…arrow_forwardWhich of the following is a belief of classical theory? A. Long-run full employment B. Inflexible wages C. Inflexible prices D. All of the above answers are correctarrow_forward
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