Principles of Economics 2e
2nd Edition
ISBN: 9781947172364
Author: Steven A. Greenlaw; David Shapiro
Publisher: OpenStax
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Textbook Question
Chapter 26, Problem 12RQ
Do neoclassical economists see a value in tolerating a little more inflation if it brings additional economic output? Explain your answer.
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Does neoclassical economics view prices and wages as sticky or flexible? Why?
Why would neoclassical economists think that the government doesn't need to
take many steps to combat unemployment? Whether you concur or disagree
Explain.
According to neoclassical theory, compensating consumers for inflation as measured by a base year weighted index can overcompensate them because:
A some goods may be inferior
B relative prices may not have changed
C some goods may give disutility
D goods are substitutable in consumer preferences
Chapter 26 Solutions
Principles of Economics 2e
Ch. 26 - Do rational expectations tend to look back at past...Ch. 26 - Legislation proposes that the government should...Ch. 26 - Would it make sense to argue that rational...Ch. 26 - Summarize the Keynesian and Neoclassical models.Ch. 26 - Does neoclassical economics focus on the long term...Ch. 26 - Does neoclassical economics view prices and wages...Ch. 26 - What shape is the long-nm aggregate supply curve?...Ch. 26 - What is the difference between rational...Ch. 26 - A neoclassical economist and a Keynesian economist...Ch. 26 - Do neoclassical economists tend to focus more on...
Ch. 26 - Do neoclassical economists tend to focus more on...Ch. 26 - Do neoclassical economists see a value in...Ch. 26 - If aggregate supply is vertical, what role does...Ch. 26 - What is the shape of the neoclassical long-run...Ch. 26 - When the economy is experiencing a recession, why...Ch. 26 - If the economy is suffering through a rampant...Ch. 26 - If most people have rational expectations, how...Ch. 26 - Explain why the neoclassical economists believe...Ch. 26 - Economists from all theoretical persuasions...Ch. 26 - Is it a logical contradiction to be a neoclassical...Ch. 26 - Use Table 26.3 to answer the following questions....
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- Explain why classical assumptions are not realistic?arrow_forwardWhat is the Neoclassical Economics view of labor markets. How do they function? Does the economy produce full employment? How? If not, why?arrow_forwardWrite a word defense of either the Keynesian perspective or the Neoclassical perspective of economics. Which worldview makes the most sense? You are encouraged to relate your explanation to specific examples, politics, the fashion industry, your own life, etc.arrow_forward
- Do neoclassical economists tend to focus more on long term economic growth or on recessions? Explain briefly.arrow_forwardWould it be plausible to claim that the theory of rational expectations is a distorted form of neoclassical economics? Explain.arrow_forwardExplain what is meant by ‘macroeconomics’ and why some economists think that it is different to standard neoclassical economics. explain with graphs please.arrow_forward
- Is it possible for there to be inflation present in the economy and still witness a decline in a large number of goods? If so, how and why is this possible?arrow_forwardAccording to a neoclassical perspective, in the long run, a surge in aggregate demand will most likely result in A) A rise in the level of output. B) An increase in the aggregate price level. C) A decline in the level of output D) Downward pressure on the price level.arrow_forwardNeoclassical economics does not provide an adequate conceptual framework for the analysis and understanding of economic change and the dynamics of the global economy. Why? In recent years which theory challenges the fundamental assumptions of the neoclassical theory? What is counter-arguments? Explain and discuss.arrow_forward
- One practical limitation of the Classical or Neoclassical model is that it suggests allowing the economy to self-correct in the long run, but recessions may last a very long time. How severe is this problem and why? What is one example?arrow_forwardIn neoclassical economics, if there is unemployment, it means that:arrow_forwardWhy is inflation a macroeconomic problem? Why can't an inflation rate of 0% be achieved?arrow_forward
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