ZuoTi.Pro
Question

1) Thinking back to the business cycle discussion, how would Keynesian economists explain the performance of...

1) Thinking back to the business cycle discussion, how would Keynesian economists explain the performance of the economy during the last few years? What has happened to aggregate demand?

2) Next, how would neoclassical economists explain the performance of the economy during the last few years? What has happened to aggregate supply?

business   economics   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

1)

According to Keynesian thought, the business cycle is caused by the change in aggregate demand. Fall in the aggregate demand causes the rise in the recessionary pressure.

There was a Great economic recession in 2008 and aggregate demand was very low. The government raised the aggregate demand by increasing its expenditure level. It drove up the demand and the economy started to recover. Recovery is almost complete. now there must be a fall in the government expansionary activities. Now expansionary activities would cause a rise in the general price only.

Over the last few years, the economy was not utilizing its potentially but now it has reached its potential level. Now there is a need to stop the further rise in the aggregate demand.

0 0
Add a comment
Know the answer?
Add Answer to:
1) Thinking back to the business cycle discussion, how would Keynesian economists explain the performance of...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • What is the whole debate about Aggregate Demand creating Supply versus Aggregate Supply Creating Demand? Which...

    What is the whole debate about Aggregate Demand creating Supply versus Aggregate Supply Creating Demand? Which view do you see in your everyday experience? Why does this debate continue? Thinking back to the business cycle discussion, how would Keynesian economists explain the performance of the economy during the last few years? Next, how would neoclassical economists explain the performance of the economy during the last few years? Which interpretation makes the most sense to you? Why? Robert Skidelsky is the...

  • Please help me with this question:)?

    Next, how would neoclassical economists explain the performance of the economy during the last few years? What has happened to aggregate supply? What evidence can you present to support this position? Evaluate the evidence and decide which interpretation makes the most sense to you. Explain your reasoning. 

  • Macroeconomics Discussion Topic: Thinking back to the discussion on the state of the macroeconomy, would you...

    Macroeconomics Discussion Topic: Thinking back to the discussion on the state of the macroeconomy, would you describe the economy as booming, recovering, or in recession during the last few years? Why? Use the AD/AS model to illustrate this graphically. Which curve do you think caused the change? Explain your reasoning

  • Which model is known to do a good job explaining long-term economic growth? Keynesian supply-side A...

    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...

  • 1. How do Classical economists and Keynesian economists differ in their perceptions of how well markets...

    1. How do Classical economists and Keynesian economists differ in their perceptions of how well markets and prices function? 2. List and briefly explain the three market arenas. 3. Which are the four components of the macroeconomy? Explain the interaction between these components through a circular flow diagram. 4. Draw a graph of a business cycle. Label and explain the phases of a business cycle. 5. Define the following concepts: a) Sticky Prices b) Expansion and contraction c) Inflation, Deflation...

  • 1. Describe the sequence of events that real business cycle theorists would use to explain how...

    1. Describe the sequence of events that real business cycle theorists would use to explain how an adverse supply shock would impact the economy. Use your answer to explain why it is easy to confuse cause and effect between changes originating on the supply side and those that begin on the demand side.

  • In the Keynesian zone of the aggregate supply curve, how is Keynes’ law, where demand creates...

    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 demand does effectively increase aggregate outputs because of the excess capacity in the economy. Because the economy is closer to full output, aggregate demand either increasing or decreasing has a large effect on prices and little effect on aggregate supply. Prices remain relatively static and outputs remain unchanged...

  • A weakness of the neoclassical economic view is that it: can overlook the long-term causes of...

    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...

  • 1) A) " the main, and in itself sufficient, cause of business cycle fluctuations... is the fact that technical and commercial progress... sometimes speeds up and sometimes slows down." (knut W...

    1) A) " the main, and in itself sufficient, cause of business cycle fluctuations... is the fact that technical and commercial progress... sometimes speeds up and sometimes slows down." (knut Wicksell) Do you agree? B) Explain what happens when the FED conducts an open-market sale of $300 billion in bonds. How do the banks get involved? what is the ultimate effect on the monetary base and the money supply? C) How do Keynesian and classical economists differ in their opinions...

  • Aggregate Demand Aggregate Supply Questions Short Answer (25 points each) a. What is changing, AD or...

    Aggregate Demand Aggregate Supply Questions Short Answer (25 points each) a. What is changing, AD or SRAS? b. Will it increase or decrease? Explain how this change will take place. c. Draw the appropriate change below. d. What happened to Real GDP? e. What phase of the business cycle would the economy be in? f. What is likely happening to unemployment? g. What happened to price level? Short Answer (25 points each) Small Case 1. Government passes tax reduction on...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT