Macroeconomics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN: 9781305506756
Author: James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher: Cengage Learning
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Chapter ST4, Problem 3CQ
To determine
Effect of government intervention over the business cycle.
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Students have asked these similar questions
Without government intervention, would the economy fluctuate more or less over the business cycle? Contrast the two views on this issue. Be sure to address both the inherent stability of the market economy as well as the impact of government interventions to steer the economy.
Although markets could resolve economic downturns, one of John Maynard Keynes’ central points was that ...
Group of answer choices
a. Market solutions only worked when governments lowered taxes
b. Market solutions would take too long
c. Market solutions only worked when governments raised taxes
d. Markets would always benefit only those who owned capital
True or false
Macroeconomics deals with the economy as whole
Chapter ST4 Solutions
Macroeconomics: Private and Public Choice (MindTap Course List)
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- 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_forwardWhy is macroeconomics important? a. it helps in determining appropriate fiscal and monetary policies b. it gives a picture of the economic problems of the country c. All of these options are correct d. it provides answer to address national economic problemsarrow_forwardThe macroeconomic environment affects corporate performance, but the degree depends on the business cycle. Discuss how recessionary and inflationary macroeconomic circumstances affect enterprises.arrow_forward
- why is it not possible for governments to efficiently provide everyone with free healthcare and free higher education without there being negative effects to the aggregate economy? How does personal gain affect choices by individuals and government? Resources are finite. What about incentives as opposed to free offerings?arrow_forwardKeynesian economics defends budget balance. However, according to economists, budget balance may exacerbate the effects of the business cycle. Isn't it also a Keynesian view to use discretionary policy to smoothen the business cycles? Aren't those two views contradictory?arrow_forwardWhy governments / decision makers try to achieve the stable economic growth and lower inflation? Evaluate the macroeconomic measures, employing fiscal and/or monetary policies, which could be taken to balance these two objectives.arrow_forward
- Why do economists seek to abstract from the business cycle to focus on long-term secular trends in output?arrow_forwardConsider the neo-classical approach to macroeconomics. What does that theory suggest will happen when there is a recession? Group of answer choices a. Wages will decrease b.Wages will increase c. Government should spend less money d. Government should spend more moneyarrow_forwardWhich one of the following statements is INCORRECT? A Keynesian economists believe that the business cycle is caused by external factors, such as governmentinterference in the economy.B Classical economists believe that market economies are inherently stable and fluctuations are ascribed toexogenous factors.C Classical economists believe that government should not intervene in the economy to try to smooth out thebusiness cycle.D Structuralist economists believe that the market system is neither inherently stable norsystematically unstable . Consider the case of two countries, Afghanistan and the US, both producing carpets and fighter aircraft.The table below shows output rates per day in the two countries if all resources are fully and efficientlyemployed. Use this information to answer the question.Carpets Fighter aircraftAfghanistan 100 4US 500 25An appropriate international exchange ratio that would allow mutually advantageous trade to takeplace would be: A 1 aircraft = 25 carpets.B…arrow_forward
- There are five mainstream schools of economic thinking on issues There are five mainstream schools of economic thinking on issues relating to what government can or cannot do with respect to stabilizing the economy. What are these schools and how do they differ on issues concerning unemployment and inflation? There are five mainstream schools of economic thinking on issuesarrow_forwardDoes the graph above reflect a Classical Model or a Keynesian Model? How do you know? What is happening in this economy in the short run?arrow_forwardThe following are examples of macroeconomic questions that remain debated among economists and policy-makers: 1. Does economic growth create inequality in income and wealth? 2. Do lower wages reduce unemployment? 3. Is there a trade-off between unemployment and inflation? 4. Is a large government debt a problem? 5. Should central banks target inflation in asset prices or only in consumer prices? Choose any two of the above questions and in each case briefly outline the economic reasoning behind different viewpoints.arrow_forward
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