Macroeconomics
10th Edition
ISBN: 9780134896441
Author: ABEL, Andrew B., BERNANKE, Ben, CROUSHORE, Dean Darrell
Publisher: PEARSON
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Chapter 11, Problem 6RQ
To determine
To Explain: The means by which an increase in government purchases impacts upon the level of output and the rate of real interest in the long run and the short run as suggested by the Keynesian school of thought.
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In the Keynesian model (that is, the short run), what causes recessions?
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the history of the marginal income tax structure in the U.S. support or challenge the idea of tickle down
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- Can someone please answer both questions asap?In a basic Keynesian macroeconomic model, if Effective demand is greater than the output then A. ED > Y(I > S) - V (decrease) Y (increase) B. ED > Y(I > S) - V (increase) Y (decrease) C. ED < Y(I < S) - V (decrease) Y (increase) D. ED < Y(I < S) - V (increase) Y (decrease) Question 2 What would happen in the market for loanable funds if the government were to decrease the tax rate on interest income? A. The supply of and demand for loanable funds would shift right. B. The supply of and demand for loanable funds would shift left. C. The supply of loanable funds would shift right and the demand for loanable funds would shift left. D. None of the above is correct.arrow_forwardJohn Maynard Keynes spearheaded a new school of macroeconomic theory during the Great Depression. Which of the following represents a Keynesian point of view of macroeconomics?arrow_forwardWhat portions of Keynesian economic theory have the most merits?arrow_forward
- What is Global Keynesianism?arrow_forwardExplain why in our New-Keynesian model, equilibrium out- put (Y) and employment (N) are demand-determined. What is the key parameter driving this result? Explain.arrow_forwardWhy did John Maynard Keynes develop a new Macroeconomic Theory about the economy?arrow_forward
- If a Keynesian economist were asked to make a statement about the relationship between the government and the economy, what might she say? a. “Government intervention in the economy is sometimes necessary.” b. “Government intervention is the only solution for economic problems.” c. “It is never a good idea for the government to intervene in the economy.” d. “The government should be primarily concerned with public safety and health.” e. “The government’s only role is to provide defense and protect property rights.”arrow_forwardIf markets do not self-adjust, how can a decline in spending lead to a negative process that ruins an economy?arrow_forwardWhat's a simple explanation of the Keynesian Economic Theory?arrow_forward
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