Homework Answers
4. The neoclassical economist would recommend, when the economy is facing a depression, that no effective fiscal or monetary policy be introduced as it would only trigger inflation to rise rather than GDP to increase. Neoclassical economists assume that the economy is self-correcting, that is, returning to equilibrium on its own
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4. When the economy is experiencing a recession, why would a neoclassical economist be unlikely to...
A neoclassical economist and a Keynesian economist are studying the economy of Vineland. It appears that...
A neoclassical economist and a Keynesian economist are studying the economy of Vineland. It appears that Vineland is beginning to experience a mild recession with a decrease in aggregate demand. Which of these two economists would likely advocate that the government of Vineland take active measures to reverse this decline in aggregate demand? the Keynesian economist both economists would take action the neoclassical economist neither economist would take action
Suppose the economy is experiencing a recession with high unemployment. With a goal of increasing GDP...
Suppose the economy is experiencing a recession with high unemployment. With a goal of increasing GDP back to the full employment level: What would a conservative economist suggest policy makers do as the correct course of action? (Think of those that may align their thinking to that of Say, who by the way, are referred to as classical liberals.)
Suppose the economy is experiencing a recession with high unemployment. With a goal of increasing GDP...
Suppose the economy is experiencing a recession with high unemployment. With a goal of increasing GDP back to the full employment level: What would a liberal economist suggest policy makers do as the correct course of action? (Think of those that may align their thinking to that of Keynes, a more modern way of using the term liberal.)
Suppose the economy is experiencing a recession with high unemployment. With a goal of increasing GDP...
Suppose the economy is experiencing a recession with high unemployment. With a goal of increasing GDP back to the full employment level: What would you suggest policy makers do as the correct course of action?
When aggregate supply shifts and causes the economy to enter a recession similar to the Great...
When aggregate supply shifts and causes the economy to enter a recession similar to the Great Recession, explain why monetary policy is much less likely to restore the economy to its prerecession conditions that if the recession is caused solely by a decrease in aggregate demand.
When an economy is experiencing a recession and the MPC = 4/5, a $5 billion dollar increase in government spending will cause output to increase by
1. When an economy is experiencing a recession and the MPC = 4/5, a $5 billion dollar increase in government spending will cause output to increase by $20 billion $400 million $25 billion $160 million2. Which of the following is the most frequently used monetary policy tool of the Federal Reserve to change the money supply? the discount rate open market operations changing tax rates the required reserve ratio3. During the 2008-2009 recession, the Federal Reserve provided additional liquidity into the financial system. This ultimately reduced the federal funds rate, which...
(6) Imagine that the economy is in a recession. Which one of the following tactics is...
(6) Imagine that the economy is in a recession. Which one of the following tactics is a way to increase output by shifting aggregate demand outward? Raising taxes to increase the government surplus Increasing government spending Increasing the required reserve ratio Imposing tariffs on foreign goods (7) In the short run, supply shocks cause prices to __________ and the quantity demanded to __________. increase; increase increase; decrease decrease; increase decrease; decrease (8) Good deflation...
1) Suppose that the national economy is experiencing a recession with an estimated recessionary gap of...
1) Suppose that the national economy is experiencing a recession with an estimated recessionary gap of $10 billion. Congress is considering the use of fiscal policy to ease the recession, and due to current political sentiments, it has determined that the maximum spending increase the government is willing to support is $3 billion. The government wants to make up the remainder of the recessionary gap using tax cuts. If a spending increase of $3 billion is approved and the MPC...
Assume that a hypothetical economy with an MPC of.8is experiencing severe recession. a) By how much...
Assume that a hypothetical economy with an MPC of.8is experiencing severe recession. a) By how much would government spending have to increase to shift the aggregate demand curve rightward by $50 billion (nominal terms)? Ans: Show work: b) How large a tax cut would be needed to achieve this same increase in aggregate demand (nominal terms)? Ans: Show work: c) Why the difference in a) and b) above? (One sentence)
QUESTION 10 Using demand-side fiscal policy to stimulate aggregate demand when the economy is at full...
QUESTION 10 Using demand-side fiscal policy to stimulate aggregate demand when the economy is at full employment will primarily result in: unemployment underemployment inflation a large economic expansion.
Assume that a hypothetical economy with an MPC of.8is experiencing severe recession. a) By how much would government spending have to increase to shift the aggregate demand curve rightward by $50 billion (nominal terms)? Ans: Show work: b) How large a tax cut would be needed to achieve this same increase in aggregate demand (nominal terms)? Ans: Show work: c) Why the difference in a) and b) above? (One sentence)
QUESTION 10 Using demand-side fiscal policy to stimulate aggregate demand when the economy is at full employment will primarily result in: unemployment underemployment inflation a large economic expansion.
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