Identify the various policy choices available when an economy experiences an inflationary or recessionary gap and discuss some of the pros and cons that make these choices controversial.

Q: Briefly describe Keynesian/Demand side economic policy.

A: The measures or actions taken by governments, central banks, and other policy-making entities to…

Q: A severe negative supply shock occurs when there is a significant reduction in the supply of key…

A: Supply is the number of goods and services the supplier is willing and able to sell at the market.…

Q: Explain what the neoclassical perspective on macroecomics emphasizes and briefly discuss its overall…

A:

Q: In theory, how does the Keynesian as well as the Neoclassical perspectives work in manipulating…

A: Keynesians contend that long-term fiscal and monetary policy should be focused on boosting potential…

Q: What are the dimenstions of Policy Implementation

A: Policy making and policy implementation are long processes. After making the policy, it is assessed…

Q: Q: To what extent has the time-inconsistency problem influenced the formation and practical…

A: Time inconsistency is a problem that arises when policymaker follows one policy in advance but later…

Q: An increase in household consumption may increase output and the price level. Explain how monetary…

A: The government of an economy plays a major role in the development of an economy. With the help of…

Q: How were the Keynesian, Monetarist and New Classical theories of the economy synthesized to develop…

A: Keynesian Theory: Keynesian hypothesis places that total interest won't generally meet the stock…

Q: SUMMARIZE THREE KEYNESIAN THEORIES AND DISCUSS WHY THEY ARE VERY IMPORTANT TO EVALUATE AND…

A: Macroeconomics is a part of economics that deals with production, decision and allocation concerning…

Q: Why do economists often disagree about the conduct of macroeconomic stabilization policy?

A: Economic growth can take place only if the economy is stabilised. Macroeconomic stabilisation is a…

Q: Before the COVID-19 pandemic, we had both very low unemployment and inflation. Then unemployment…

A: Please find the answer below.   INFLATION: Inflation is a rise in prices, translated as the decline…

Q: Identify and briefly describe the main ideas Keynesian economics is based on.

A: Answer: The main ideas of Keynesian economics are given below: (1). Demand creates its own supply:…

Q: Principles of good policy design  Managing economic challenges and coming up with policy solutions…

A: Trade-off is expressed as an opportunity cost often and it includes a sacrifice which must be made…

Q: Compare and contrast the ideas of Keynes and the policies based on his ideas with the ideas and…

A: The Keynes and Supply side economics are two distinct  economic theories. Both stress upon different…

Q: If the marginal propensity to consume is zero, a temporary tax increase leads to a small decrease in…

A: In an economy, if the marginal propensity to consume is zero, it is the situation when an increase…

Q: In the AD/AS model, what happens if businesses expect higher future profits while inflationary…

A: The AD/AS (Aggregate Demand/ Aggregate Supply) model is a macroeconomic model. It explains how the…

Q: Use the AS/AD model to determine how each of these events will affect the economy. Determine if the…

A: The objective of the question is to determine the position of the economy with respect to the…

Q: Please I need a short summary for this video:…

A: The question  asks to summarise the contents of the video which contains the mechanism involved in…

Q: Now that you have learned about the Keynesian perspective, what do you think about it?  In your…

A: Economics is the study of how the scarce resources of society are exploited. It is a social science…

Q: How do Classical economists and Keynesian economists differ in their perceptions of how well markets…

A: The classical theory focuses on free markets and that the markets will regulate themselves when they…

Q: What is the difference between fiscal and monetary policy? What fiscal and monetary steps can the…

A: The tools of fiscal and monetary policy for keeping the growth of the economy stable include low…

Q: Provide arguments why should policymakers use fiscal and monetary instruments to control aggregate…

A: Meaning of Aggregate Demand and Aggregate Supply: The term aggregate demand refers to the…

Q: I need a basic explanation of John Maynard Keynes work.

A: At the time of Great Depression of the 1930s all the basic existing economic theory was unable to…

Q: Using a diagram, illustrate the classical economists' solution to the inflationary gap.

A: The aggregate demand curve shows the negative relationship between the price level and the real GDP,…

Q: What are the three well-structured paragraphs the basic principles of the New Keynesian Economics?

A: The field of economics that depicts a modern twist on the doctrine of macroeconomics evolving from…

Q: What is the difference between the Keynesian and rational expectation theories concerning the…

A: Fiscal policy and monetary coverage are called financial stabilization rules that regularly cross…

Q: are anti-inflationary policies effective when there are adverse supply shocks? which monetary or…

A: Anti-inflationary policies can be effective when there are adverse supply shocks, but the choice of…

Q: John Maynard Keynes spearheaded a new school of macroeconomic theory during the Great Depression.…

A: The objective of the question is to identify the key principles or viewpoints that represent the…

Q: How does each policy handle the two major macroeconomic failures of unemployment and inflation

A: Considering macroeconomics, it talks about the economy as a whole and not an individual. The major…

Q: The two principles that make a person a “Keynesian” consist of the ideology that the private economy…

A: Economics is the study of how the scarce resources of society are exploited. It is a social science…

Q: Focuses on explaning why recessions and depressions occur, as well as offering a policy prescription…

A: The economic cycle represents those periods of cyclical fluctuations that occur in an economy in…

Q: According to Keynesian Theory, stabilization policy (i.e. Aggregate Demand Management) should not be…

A: Uncertainty refers to a state of incomplete knowledge or information about future events, outcomes,…

Q: In the AS/AD model, what are the main differences between the neoclassical perspective and the…

A: AD / AS, the model can be used to illustrate both the Say's law and the Keynes law.  Say's Law…

Q: Why Keynesian economics become popular back in 1930’s. Do you think that during 2005-08 financial…

A: Keynesian economics was a focus made by J.M Keynes to understand the great depression of 1930. His…

Q: Explain why a supply shocks is most of the time believed to be temporary? And does not result in…

A: A supply usually shock occurs when the supply of a commodity or service suddenly increases or…

Q: Only Keynesian economics argues for active macroeconomic policy.    True  False

A: The functionality of the economy as a whole is a concern of macroeconomic policy.Macroeconomic…

Q: Is an adverse supply shock likely to give rise to an inflationary gap or a recessionary gap? Why?…

A: A supply shock refers to a premature and unexpected transition in the availability or cost of…