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 3SCQ
Would it make sense to argue that rational expectations economics is an extreme version of neoclassical economics? Explain.
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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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- Why would an economist choose either the neoclassical perspective or the Keynesian perspective, but not both?arrow_forwardReview the neoclassical model's basic microeconomic presumptions regarding customer behavior.arrow_forwardWhat does potential GDP mean and what does it mean in terms of neoclassical analysis? Please be sure to utilise examples.arrow_forward
- Explain why classical assumptions are not realistic?arrow_forwardReview the fundamental microeconomic assumptions on the consumers’ behaviour within the neoclassical model. What are the main strengths and the main limitations of those assumptions? Discuss with theoretical and applied evidence.arrow_forwardDiscuss the core notions of the market-friendly approach, one of the three ideological strands associated with neoclassical thought.arrow_forward
- Which of the following statements best describes the Neoclassical perspective? OWe should study events like the Great Depression and Great Recession to learn more about macroeconomics ORecessions are primarily caused by a decline in spending OFocusing on the changes in potential GDP is more useful than aggregate demand OSticky wages are the primary cause of recessionsarrow_forwardPlease answer fastarrow_forwardOne practical limitation of the Classical or Neoclassical model is that it suggests allowing the economy to self-correct in the long run, but recessions may last a very long time. How severe is this problem and why? What is one example?arrow_forward
- You're a staffer working for Senator Joe King, a diehard opponent of minimum wages. The Senator wants to persuade other members of Congress to oppose a new proposal to raise the minimum wage. He needs you to calculate the cost to society of a $17 minimum wage according to the neoclassical model of labor markets. Suppose the market for labor has the equations LD= 172 - 4W LS= -30 + 23W where W is the wage and L is the number of workers. Give your answer in dollars, rounded to the nearest integer.arrow_forwardAccording to neoclassical theory, compensating consumers for inflation as measured by a base year weighted index can overcompensate them because: A some goods may be inferior B relative prices may not have changed C some goods may give disutility D goods are substitutable in consumer preferencesarrow_forwardIf a neoclassical model shows increasing wages growing faster than productivity in the economy over the long run, what else will likely occur? inflationary increase in price level substantial short-term off-setting decrease in output change in government policy to decrease in aggregate demand short-run decrease in cyclical unemploymentarrow_forward
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