Question

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 about how long it takes the economy to reach long-run equilibrium? What implications do these differences in beliefs have for Keynesian and classical economists' views about the usefulness of anti-recessionary policies related to the types of shocks that cause most recessions? Explain with diagrams

Answer 1

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