MACROECONOMICS FOR TODAY
10th Edition
ISBN: 9781337613057
Author: Tucker
Publisher: CENGAGE L
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Chapter 8, Problem 1SQ
To determine
The theory that explained the automatic adjustment to achieve full employment.
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In the Keynesian framework, for each of the following events which might cause a recession and/or inflation? Explain using Aggregate Demand/ Aggregate Supply.
a. A large increase in the price of the homes that people own
b. Rapid growth in the economy of a major trading partner
c. The development of a major new technology offers profitable opportunities for business
d. The interest rate rises
e. The good imported from a major trading partner becomes much less expensive. 
Changes in short-run aggregate supply can be caused by changes in:
Selected Answer:
C. government spending.
Answers:
A. the price level.
B. wealth.
C. government spending.
D. commodity prices.
In the Keynesian framework, which of the following events might cause a recession/inflation. Explain using the aggregate demand/aggregate supply. I only need the type of examples that go with the question though (Examples are crucial please!) 
d. The interest rate rises
e. The good imported from a major trading partner becomes much less expensive 
Chapter 8 Solutions
MACROECONOMICS FOR TODAY
Ch. 8.4 - Prob. 1YTECh. 8 - Prob. 1SQPCh. 8 - Prob. 2SQPCh. 8 - Prob. 3SQPCh. 8 - Prob. 4SQPCh. 8 - Prob. 5SQPCh. 8 - Prob. 6SQPCh. 8 - Prob. 7SQPCh. 8 - Prob. 8SQPCh. 8 - Prob. 9SQP
Ch. 8 - Prob. 1SQCh. 8 - Prob. 2SQCh. 8 - Prob. 3SQCh. 8 - Prob. 4SQCh. 8 - Prob. 5SQCh. 8 - Prob. 6SQCh. 8 - Prob. 7SQCh. 8 - Prob. 8SQCh. 8 - Prob. 9SQCh. 8 - Prob. 10SQCh. 8 - Prob. 11SQCh. 8 - Prob. 12SQCh. 8 - Prob. 13SQCh. 8 - Prob. 14SQCh. 8 - Prob. 15SQCh. 8 - Prob. 16SQCh. 8 - Prob. 17SQCh. 8 - Prob. 18SQCh. 8 - Prob. 19SQCh. 8 - Prob. 20SQ
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Similar questions
- In the Keynesian model (that is, the short run), what causes recessions?arrow_forwardReferring to the figure, an increase in government purchases will A. shift aggregate demand from AD1 to AD3. B. have no effect on aggregate demand. C. shift aggregate demand from AD1 to AD2. D. cause movement from point A to point B along AD1.arrow_forwardA key insight in modern macroeconomics is to understand that: a. all the above are correct b. Government has a duty to stabilize an unstable economy c. prices are sticky in the short run d. there are many equilibrium possible in the economyarrow_forward
- Suppose an economy is experiencing recession. From the list below, select two (2) policy tools that the government can use to restore the economy back to a long-run macroeconomic equilibrium. Note: if you select more than two policy tools, 1 point will be taken for each additional choice. A. The government can decrease income taxes. B. The government can increase interest rates. C. The government can increase government spending. D. The government can send optimistic messages to boost expectations. E. The government can expand the resource base.arrow_forwardWhat are the important mechanisms that reverse the effects of a recession in a modern economy? (Check all that apply.) A. Labor supply increases due to an increase in real wages. B. The multipliers on wages and employment return to normal. C. Labor demand increases due to expansionary government policies. D. Labor demand increases due to market forces. What market forces might cause the labor demand curve to shift back to the right? (Check all that apply.) A. Technological advances encourage firms to expand their activities. B. The banking system recuperates and businesses are again able to use credit to finance their activities. C. Excess inventory has been sold off. D. Wage rigidity decreases.arrow_forwardWhich of the following shifts aggregate supply to the right? a. a decline in the price of imported natural resources b. a technological advance c. an older labor force that leaves jobs less frequently d. All of the above are correct.arrow_forward
- In 1936, John Maynard Keynes published a book, The General Theory, which attempted to explain a. short-run economic fluctuations. b. stagflation. c. how changes in the money supply had created the Great Depression. d. the classical dichotomy.arrow_forwardEconomist who generally empgasize the importance of aggregate supply in determining the size of the macroeconomiy over the long run a- says law b-Neoclassical economists c-Keynes lasw dk- Neoclassical zonearrow_forwardIn the Keynesian framework, which of the following events might cause recession/inflation. Explain using the Aggregate Demand/Aggregate Supply with examples. (Examples are crucial please!) d. The interest rates rises e. The good imported from a major trading partner becomes much less expensivearrow_forward
- Which economic school relies most heavily on "sticky prices" to explain the effects of Aggregate Demand on GDP? A. Keynesian B. Monoetarist C. Rational Expectations D. Coordination Failurearrow_forwardWhat effects would each of the following have on aggregate demand or each case use a diagram to show the expected effects on the equilibrium price level and level of real output. Assume that all other things remain constant. aggregate supply? In a. A widespread fear of depression on the part of consumers. AD curve (right, left), output (up, down) and price level (up, down) (assuming no ratchet effect). b. The expectation of rapid inflation. AD curve (right, left), output (up, down) and price level (up, down). с. A sizable increase in labor productivity (with no change in nominal wages). AS curve (right, left), output (up, down) and price level (up, down). d. Depreciation in the international value of the dollar. AD curve (right, left) (increased net exports); AS curve (right, left) (higher input prices)arrow_forwardWhich of the following is likely to occur if an increase in legal immigrants significantly reduces the wages of workers, ceteris paribus? A. Aggregate supply will decrease (shift left). B. Aggregate supply will increase (shift right). C. Aggregate demand will increase (shift right). D. Aggregate demand will decrease (shift left).arrow_forward
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