Question

1, Monetary versus Fiscal Policy, which one you favored more in implementation for macroeconomics policy? Why?

2, Discuss and defend your thought about the theories of New Classical versus New Keynesian response relating to macroeconomics.

3, Discuss and compare the four main market structures with illustration.

Answer 1

1.

Macroeconomic outcomes are influenced by both monetary and fiscal policy. The former involves the management of money supply and interest rate by the central bank while the latter involves central government cut taxes or increase spending. Both policies have pros and cons where the former targets inflation and latter targets output and employment. Each of them aids in resolving economic downturns depending on the structure of the economy.

2.

New classical macroeconomics argues that anticipated monetary shock has no real effects on real variables. It assumes that wages and prices are flexible and people use all available information in decision making. The new Keynesian macroeconomics, on the other hand, gives a different explanation of the wage-price stickiness assumption including product market imperfections, price rigidities, and real rigidities .i.e. factors which influence real wages.

3.

The four types of market structures are perfect competition, monopoly, monopolistic competition, and oligopoly. Based on the number of buyers and sellers, nature of product, entry and exit restrictions and the firm's ability to affect the market price.