Macroeconomics
10th Edition
ISBN: 9780134896441
Author: ABEL, Andrew B., BERNANKE, Ben, CROUSHORE, Dean Darrell
Publisher: PEARSON
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Chapter 11, Problem 3RQ
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To Explain: The meaning of price stickiness and the reason why Keynesian economists believe that it is important when analyzing
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- A neoclassical economist and a Keynesian economist are studying the economy of Vineland. It appears that Vineland is beginning to experience a mild recession with a decrease in aggregate demand. Which of these two economists would likely advocate that the government of Vineland take active measures to reverse this decline in aggregate demand? Why?arrow_forwardWhat is supply side economics and what is the general assessment of the efficacy of supply-side economics?arrow_forwardGive a one line definition for the term "DEFICIENT DEMAND" In macro economics.arrow_forward
- What would a Keynesian likely recommend in response to a recession? What would a neoclassical likely recommend? Why would a Keynesian policy response not make much sense in response to a minor recession like the one that occurred in 1990? What would be the cost of letting the economy adjust by itself to a new long run equilibrium?arrow_forwardWhich economic condition would most likely be experienced if aggregate supply shifts from AS to AS2 as in the graph below?arrow_forwardWhat is the shape of a typical Hubbert Curve?arrow_forward
- a)What economic conditions would resultin a very steep IS curve . Briefly explain b) If an economy was in deep recession what type of demand side policy would be most effective when the IS curve is very steep?arrow_forwardShow and explain graphically the AD/AS model in neoclassical economic and macroeconomic.arrow_forwardexplain the role of supply side policy in macro economic policyarrow_forward
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