describe the Classical economists’ approach and the Keynesian economic approach to fiscal policy.
describe the Classical economists’ approach and the Keynesian economic approach to fiscal policy.
For each macroeconomic viewpoint, identify whether it is a position held by classical economists, Keynesian economists, or monetarists. If the viewpoint is shared by more than one group, check all that apply. Viewpoints Expansionary fiscal policy is either an unnecessary or ineffective response to a situation where output is below full employment. A decrease in aggregate demand will lead to only a temporary departure from full employment output. Because prices and wages are flexible, the economy will automatically adjust to...
Classical economists tend to see unemployment as a persistent economic problem. believe in Keynesian economics. reject the equality of savings and investment. support Say's law. Classical economists argued that there would always be an excess of saving over investment. workers had money illusion. excess savings would create unemployment. a flexible interest rate would make saving equal to investment.
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...
Keynesian vs. Classical 1. We already know that politicians disagree on how to fix the economic problems. It's not just politicians, economists also disagree. When the recession hit back in December 2007, first President Bush then President Obama responded quickly with stimulus packages that included tax cuts and spending increases. Several economists such as Paul Krugman and Robert Reich backed this approach as they believed Keynesian policies would restore the insufficient demand and bring the economy back to full employment...
A key feature of the traditional Keynesian approach to fiscal policy is the assumption that the price level is variable. A. True B. False
The Keynesian approach to fiscal policy assumes that changes in government spending cause direct offsets in both consumption and investment spending. A. False B. True
a. What economic circumstances gave rise to the Keynesian approach to understanding the workings of the economy? b. What are the principal differences between the Keynesian and Classical approaches to understanding the workings of the economy? Please use nonplagarized material
Explain the viewpoints of classical and Keynesian economists. How did the economy that existed at the time of these theories influence them? Which theory is more appropriate for the economy today?
Question 17 1 pts According to the Keynesian approach to fiscal policy The crowding out effect occurs only when high inflation is present. The crowding out effect is a significant problem that reduces the effectiveness of expansionary fiscal policy. The crowding out effect is quite limited as the demand for private loans is low in times of recessions. The crowding out effect is a significant problem that reduces the aggregate demand.
eopunents are and how they affect pe ear ve relationship between inflation and the unemployment rate. ch 14, notes) New classical economists argued that anticipated monetary and fiscal policy d no effect on output (policy ineffectiveness postulate) and potentially caused a misallocation of resources in the long run. Explain why they believe these two ideas. ch 1 eopunents are and how they affect pe ear ve relationship between inflation and the unemployment rate. ch 14, notes) New classical economists argued...