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A weakness of the neoclassical economic view is that it:
can overlook the long-term causes of economic growth like the
existing natural rate of unemployment even when the economy is at
potential GDP.
focuses on the long-term factors for economic growth and not
the short-term causes of economic growth such as why unemployment
fluctuates up and down over a few years.
can overlook the efficiency of the market economy in
self-correcting in the long-run.
Keynes' Law says that demand creates...
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The neoclassical view holds that long-term expansion of potential GDP due to _______ will determine _______ . economic growth; the size of the economy government spending; aggregate demand government spending: aggregate supply economic adjustments; cyclical unemployment If the neoclassical argument that the economy always moves back to potential GDP is accepted, then which of the following will be more important? encouraging higher wages fighting unemployment fighting recession encouraging long-term growth
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14. Which of the following statements would be inconsistent with
Say’s law?
A given value of supply must create an equivalent value of
demand in the economy.
The economy has flexible prices and wages.
The best way to foster an economy is through government stimulus
spending.
15. What is one of the cornerstones on which neoclassical
economics is built?
Aggregate demand determines the size of the economy.
Prices and wages lend themselves to stickiness.
Unemployment is mostly cyclical.
Prices and...
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If an economy has aggregate price levels that are increasing,
but the wage rate stays the same because of downward wage
stickiness, what would be the economic consequences?
New businesses would enter the economy, hire employees and as a
consequence the quantity of real GDP supplied would increase.
Business would fire some employees as labor becomes too
expensive and the quantity of real GDP supplied would
decrease.
Business would need to hire more employees and the quantity of
real GDP...
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According to neoclassical theory, changes in GDP, or the
vertical AS curve, will be caused by
potential output changes.
cyclical unemployment.
aggregate demand changes.
The owner of a national construction company has been watching
current economic changes. They have gathered historical data from
their company’s business experiences through up and down markets
and have decided on a plan to follow as demand changes over the
next year, three years and five year plan, with alternative options
based on past data....
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The Keynesian zone of the aggregate supply curve is_._while the neoclassical portion is_.... O upward-sloping, downward-sloping horizontal; vertical O vertical; flat How does the intermediate zone of the AD-AS curve follow Say's law when AD shifts to the right? O SRAS creates more demand by decreasing prices and output level. SRAS moves closer to potential GDP and increases price level. O SRAS is flatter and creates more supply by decreasing prices and output level Which of the following statements about...
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Which model is known to do a good job explaining long-term
economic growth?
Keynesian
supply-side
A key distinction between the Keynesian and neoclassical
economists is that Keynesians believe the economy exhibits a
________ aggregate supply curve and neoclassicals believe it is
________.
upward-sloping; downward-sloping
flat; vertical
vertical; flat
In the Keynesian zone of the aggregate supply curve, how is
Keynes’ law, where demand creates its own supply, illustrated?
Prices change relatively little with an increasing aggregate
demand, but that changing...
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1. If the economy is at full employment, increases in government spending: A) have a multiplier effect on equilibrium output. B) have no effect on the aggregate price level. C) are primarily absorbed by price increases. D) reduce aggregate output. 2. Which of the following measures is NOT an example of discretionary fiscal policy? A) The unemployment compensation program pays out more money as unemployment rates rise. B) Tax rates are increased in the hope of slowing down the rate...
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can you help on answering all of them (answer them
correctly)
Question 9 1 pts The vertical, long-run aggregate supply curve indicates that the long-run level of economic output is dependent upon the stock of productive factors the price level government subsidies Question 10 1 pts When does the GDP gap shrink? It shrinks as the economy recovers from recession. It shrinks as the economy is contracting with government intervention. It shrinks as the government reduces the budget deficit through...
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5) If consumption increases by $200 and, in response, equilibrium aggregate expenditure increases by $600, the multiplier is A) 5 B) 0.5.C)2. D) 0.3. 6) When the GDP in Kuwait rises relative to the GDP in other countries, will fall and will fall A) exports; imports B) exports; net exports C) imports; net exports D) net exports; imports 7) An increase in the price level will A) shift the aggregate demand curve to the left. B) shift the aggregate demand...
The Keynesian zone of the aggregate supply curve is_._while the neoclassical portion is_.... O upward-sloping, downward-sloping horizontal; vertical O vertical; flat How does the intermediate zone of the AD-AS curve follow Say's law when AD shifts to the right? O SRAS creates more demand by decreasing prices and output level. SRAS moves closer to potential GDP and increases price level. O SRAS is flatter and creates more supply by decreasing prices and output level Which of the following statements about...
1. If the economy is at full employment, increases in government spending: A) have a multiplier effect on equilibrium output. B) have no effect on the aggregate price level. C) are primarily absorbed by price increases. D) reduce aggregate output. 2. Which of the following measures is NOT an example of discretionary fiscal policy? A) The unemployment compensation program pays out more money as unemployment rates rise. B) Tax rates are increased in the hope of slowing down the rate...
can you help on answering all of them (answer them
correctly)
Question 9 1 pts The vertical, long-run aggregate supply curve indicates that the long-run level of economic output is dependent upon the stock of productive factors the price level government subsidies Question 10 1 pts When does the GDP gap shrink? It shrinks as the economy recovers from recession. It shrinks as the economy is contracting with government intervention. It shrinks as the government reduces the budget deficit through...
5) If consumption increases by $200 and, in response, equilibrium aggregate expenditure increases by $600, the multiplier is A) 5 B) 0.5.C)2. D) 0.3. 6) When the GDP in Kuwait rises relative to the GDP in other countries, will fall and will fall A) exports; imports B) exports; net exports C) imports; net exports D) net exports; imports 7) An increase in the price level will A) shift the aggregate demand curve to the left. B) shift the aggregate demand...