Principles of Economics 2e
2nd Edition
ISBN: 9781947172364
Author: Steven A. Greenlaw; David Shapiro
Publisher: OpenStax
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Textbook Question
Chapter 26, Problem 19CTQ
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?
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Chapter 26 Solutions
Principles of Economics 2e
Ch. 26 - Do rational expectations tend to look back at past...Ch. 26 - Legislation proposes that the government should...Ch. 26 - Would it make sense to argue that rational...Ch. 26 - Summarize the Keynesian and Neoclassical models.Ch. 26 - Does neoclassical economics focus on the long term...Ch. 26 - Does neoclassical economics view prices and wages...Ch. 26 - What shape is the long-nm aggregate supply curve?...Ch. 26 - What is the difference between rational...Ch. 26 - A neoclassical economist and a Keynesian economist...Ch. 26 - Do neoclassical economists tend to focus more on...
Ch. 26 - Do neoclassical economists tend to focus more on...Ch. 26 - Do neoclassical economists see a value in...Ch. 26 - If aggregate supply is vertical, what role does...Ch. 26 - What is the shape of the neoclassical long-run...Ch. 26 - When the economy is experiencing a recession, why...Ch. 26 - If the economy is suffering through a rampant...Ch. 26 - If most people have rational expectations, how...Ch. 26 - Explain why the neoclassical economists believe...Ch. 26 - Economists from all theoretical persuasions...Ch. 26 - Is it a logical contradiction to be a neoclassical...Ch. 26 - Use Table 26.3 to answer the following questions....
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- Explain how Milton Friedman's economic views differed from those of Keynes and explain why more recent developments in the global economy can be said to have vindicated both Friedman's and Keynesian economic views.arrow_forwardSummarize the Keynesian and Neoclassical models.arrow_forwardWould it make sense to argue that rational expectations economics is an extreme version of neoclassicaleconomics? Explain.arrow_forward
- Now think about a major recession, like the one that occurred in 1982. (Hint: a major recession could be caused by a large shift to the left in the AD curve.) Why would a Keynesian policy make more sense in response to a major recession like the one that occurred in 1982? What would be the cost of following a neoclassical policy then?arrow_forwardAccording to Keynesian economics, what is the suggested approach to address a recession? A) Reduce government spending and taxes. B) Increase government spending to stimulate demand. C) Maintain a hands-off approach and let markets self-correct. D) Raise interest rates to control inflation.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_forward
- What is the Keynesian and Neoclassical models.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_forwardWould it be plausible to claim that the theory of rational expectations is a distorted form of neoclassical economics? Explain.arrow_forward
- Explain why classical assumptions are not realistic?arrow_forwardHow were the Keynesian, Monetarist and New Classical theories of the economy synthesized to develop the New Keynesian Economics?arrow_forwardDoes neoclassical economics focus on the long term or the short term? Explain your answer.arrow_forward
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