Thanks! -Explain the four theories of unemployment. Indicate which type should policy target the most in theshort-run and why, and which type should policy target the most long-run and why?-Explain the relationship between the Keynesian consumption theory and savings theory and howboth leads to the determination of marginal propensity to consume (MPC) and marginal propensityto save-If the Tax Multiplier is -7, what is the Government Spending Multiplier? (MPS).

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-Explain the four theories of unemployment. Indicate which type should policy target the most in the short-run and why, and which type should policy target the most long-run and why?

MACROECONOMICS

14th Edition

ISBN:9781337794985

Author:Baumol

Publisher:Baumol

Chapter11: Managing Aggregate Demand: Fiscal Policy

Section: Chapter Questions

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Question

Thanks!

-Explain the four theories of unemployment. Indicate which type should policy target the most in the
short-run and why, and which type should policy target the most long-run and why?
-Explain the relationship between the Keynesian consumption theory and savings theory and how
both leads to the determination of marginal propensity to consume (MPC) and marginal propensity
to save
-If the Tax Multiplier is -7, what is the Government Spending Multiplier? (MPS).

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Step 1: Define unemployment

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Step 2: Explain the types of unemployment

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Step 3: Analyze which category of unemployment ought to be managed in both time periods

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