Microeconomics: Private and Public Choice (MindTap Course List)
15th Edition
ISBN: 9781285453569
Author: James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher: Cengage Learning
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Chapter ST4, Problem 2CQ
To determine
Determine the difference between Keynes and Hayek on the role of savings in the economy.
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Students have asked these similar questions
What does it mean by the logic:
When output is too low, what needed is an increase in demand for goods and services. Investment is one component of demand, and saving equals investment. Therefore, if the government could just convince households to attempt to save more, then investment and output would increase.
The Economist article, "Low interest rates leave savers with few good options", states
that savers are likely to respond to low rates in one of the following three ways:
Lincrease athletic activity, go back to school, or, spend more on entertainment
O re-watch the movie Trading Places, invest in Treasury bills, or, move to Germany
save more and spend less, set aside less money due to higher returns, or,
decrease investments in risky assets
save less and spend more, set aside more money to make up for low returns, or,
increase investments in risky assets
In 2010 the Greek government had to inform the European Commission on how it would control its budget deficit and improve the performance of its economy. The government’s debt is so high that agencies assessing the creditworthiness of the government downgraded it (which would mean more interest has to be paid to raise finance). Proposals were likely to include a 10% cut in government spending.
What actions can the government take to increase national income growth in Greece?
If the Greek economy is in recession what would you expect to be the effect on:
a) Inflation?
b) Unemployment?
c) Imports?
Explain your answers.
Chapter ST4 Solutions
Microeconomics: Private and Public Choice (MindTap Course List)
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- In Classical theory, Saving may increase due to decrease in Interest Ratearrow_forwardFill in the blank. ALEX: Hi, Becky. I’m intrigued to see how macroeconomics allows us to explain recent economic events such as the Great Recession that affected so many people. But there’s one thing I don’t understand. Was the collapse of the housing bubble the only cause of the recession, or were there other factors as well? BECKY: Hi, Alex. I agree that macroeconomic theory offers an entirely new perspective on how the economy works. To answer your question, the crash of the housing market was a major factor but not the only cause of the Great Recession. The professor mentioned that the __________ (options: financial, fiscal, government) system deteriorated as well, an event that deepened the economic downturn even further. ALEX: I see. So the bursting of the housing bubble caused the initial decline in aggregate demand. Then the financial crisis caused aggregate demand to decline even more. Could you also help me understand how to use the aggregate demand and aggregate supply model…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_forward
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