Macroeconomics (9th Global Edition)
9th Edition
ISBN: 9780134141534
Author: Andrew B. Abel, Ben Bernanke
Publisher: Pearson Global Edition
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Question
Chapter 8, Problem 8RQ
To determine
To Explain: The differences among Classical and Keynesian economists on the timeline involved in reaching long-run equilibrium and the usefulness of policies of antirecessions in this regard
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Students have asked these similar questions
How do Keynesians and classicals differ in their beliefs about how long it takes the economy to reach long-run equilibrium? What implications do these differences in beliefs have for Keynesian and classical views about the usefulness of antirecessionary policies? About the types of shocks that cause most recessions?
What would a Keynesian likely recommend in response to a recession? What would a neoclassical likely recommend? Why would a Keynesian policy response not make much sense in response to a minor recession like the one that occurred in 1990? What would be the cost of letting the economy adjust by itself to a new long run equilibrium?
Draw and properly label an AD-AS model to show Keynesian, intermediate, and
neoclassical zones. Then, briefly explain the levels of unemployment, inflation
and real GDP in each zone, and also confirm whether all three goals of a macro
economy are being achieved in each zone.
2. Draw and properly label the AD-AS graphs or one AD-AS graph to show
recessionary and inflationary gaps. Then, discuss in detail how Keynesians suggest that
recessionary and inflationary gaps be closed.
3. Draw and properly label AD-AS graphs or one AD-AS graph to show recessionary
and inflationary gaps. Then, discuss in detail how neoclassicals suggest
that recessionary and inflationary gaps be closed.
Chapter 8 Solutions
Macroeconomics (9th Global Edition)
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Similar questions
- Consider the neo-classical approach to macroeconomics. Given there is a recessionary period, that theory suggests that, given some time ... Group of answer choices a. The AD line will shift right b. The AS line will shift left c. The AD line will shift left d. The AS line will shift rightarrow_forwardusing the Keynesian AD-AS diagram how can the economy be in a state of equilibrium at any level of real output where AD intersects ASarrow_forwardExplain why economic fluctuations happen according to Keynesians. Why do expansions happen, and recessions?arrow_forward
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