Macroeconomics
13th Edition
ISBN: 9781337617390
Author: Roger A. Arnold
Publisher: Cengage Learning
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Chapter 9, Problem 2QP
To determine
Explain Say’s law in the viewpoint of classical economists.
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How do Classical economists and Keynesian economists differ in their perceptions of how well markets and prices function?
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Consider a classical economy described as follows:
? = ?^(1/2)?^(1/2) , where L is the amount of labor and K is the amount of capital. The economy has 10,000 units of labor and 10,000 units of capital.
Consumption (C): 5,020-100r, Investment (I) : 2,000-100r, Taxes (T): 2,500, Government Purchases (G) :3,000
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
Chapter 9 Solutions
Macroeconomics
Ch. 9.1 - Prob. 1STCh. 9.1 - Prob. 2STCh. 9.1 - Prob. 3STCh. 9.2 - Prob. 1STCh. 9.2 - Prob. 2STCh. 9.2 - Prob. 3STCh. 9.3 - Prob. 1STCh. 9.3 - Prob. 2STCh. 9.3 - Prob. 3STCh. 9 - Prob. 1QP
Ch. 9 - Prob. 2QPCh. 9 - Prob. 3QPCh. 9 - Prob. 4QPCh. 9 - Prob. 5QPCh. 9 - Prob. 6QPCh. 9 - Prob. 7QPCh. 9 - Prob. 8QPCh. 9 - Prob. 9QPCh. 9 - Prob. 10QPCh. 9 - Prob. 11QPCh. 9 - Prob. 12QPCh. 9 - Prob. 13QPCh. 9 - Prob. 14QPCh. 9 - Prob. 15QPCh. 9 - Prob. 16QPCh. 9 - Prob. 17QPCh. 9 - Prob. 18QPCh. 9 - Prob. 1WNGCh. 9 - Prob. 2WNGCh. 9 - Prob. 3WNGCh. 9 - Prob. 4WNGCh. 9 - Prob. 5WNGCh. 9 - Prob. 6WNGCh. 9 - Prob. 7WNG
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- Outline the 9 assumptions of classical theory and explain each assumption.arrow_forwardAccording to Keynesian economists, if people in the economy are not spending enough then the __________ should step in to fill the gap. a federal reserve b markets c federal government d banksarrow_forwardexplain why classical economists thought there was no inherent tendency in the market system to overproduction, recession and depressionarrow_forward
- If there is a leakage in the economy, how is that leakage matched by an equal amount of an injection, according to classical economics?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_forwardWhat are some limitations of the Classical Theory that Keynesian Theory learnt from and tried to fix?arrow_forward
- According to the classical perspective (the one from the 19th century that I described at the beginning of my first lecture video), what kinds of things could cause recessions or other economic downturns?arrow_forwardIf an economy is not expanding and the economy is therefore suffering from high unemployment, then would putting more money in the economy make matter better or worsearrow_forwardWhat would a Keynesian likely recommend in response to a recession?arrow_forward
- Per the classical economists, if the quantity of money that people wanted to save was greater than the amount that people wanted to invest, the interest rate would fall. True or Falsearrow_forwardHow do Classical and Keynesian economists differ in their view of the aggregate supply curve?arrow_forwardWhat is Global Keynesianism?arrow_forward
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