Macroeconomics
13th Edition
ISBN: 9781337617390
Author: Roger A. Arnold
Publisher: Cengage Learning
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Question
Chapter 9, Problem 5QP
To determine
Explain classical economists’ view of increase in saving.
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How do Classical and Keynesian economists differ in their view of the aggregate supply curve?
If the economy is operating in the neoclassical zone of the SRAS curve and aggregate demand falls, what is likely to happen to real GDP?
Use the following scenario for the next two questions. Suppose that the federal government decides to forgive
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thinking about the AD/AS model, which curve would this shift in the short-run, and in which direction?
AD curve, to the left
AD curve, to the right
OSRAS curve only, to the right
OSRAS and AD curves, to the left.
OSRAS and LRAS curves, to the left
Chapter 9 Solutions
Macroeconomics
Ch. 9.1 - Prob. 1STCh. 9.1 - Prob. 2STCh. 9.1 - Prob. 3STCh. 9.2 - Prob. 1STCh. 9.2 - Prob. 2STCh. 9.2 - Prob. 3STCh. 9.3 - Prob. 1STCh. 9.3 - Prob. 2STCh. 9.3 - Prob. 3STCh. 9 - Prob. 1QP
Ch. 9 - Prob. 2QPCh. 9 - Prob. 3QPCh. 9 - Prob. 4QPCh. 9 - Prob. 5QPCh. 9 - Prob. 6QPCh. 9 - Prob. 7QPCh. 9 - Prob. 8QPCh. 9 - Prob. 9QPCh. 9 - Prob. 10QPCh. 9 - Prob. 11QPCh. 9 - Prob. 12QPCh. 9 - Prob. 13QPCh. 9 - Prob. 14QPCh. 9 - Prob. 15QPCh. 9 - Prob. 16QPCh. 9 - Prob. 17QPCh. 9 - Prob. 18QPCh. 9 - Prob. 1WNGCh. 9 - Prob. 2WNGCh. 9 - Prob. 3WNGCh. 9 - Prob. 4WNGCh. 9 - Prob. 5WNGCh. 9 - Prob. 6WNGCh. 9 - Prob. 7WNG
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Similar questions
- Question 24 Consider a standard AD-AS model. If the marginal propensity to consume is zero, a temporary tax cut leads to a small increase in inflation and a large decrease in unemployment in the short run. Answer True or False. Remember to include your explanation.arrow_forwardSuppose most business executives expect a slowdown in the economy. How might this situation affect the economy?arrow_forwardcalculate the marginal propensity to consume.arrow_forward
- In the AD/AS model assume 2019 began with potential real GDP = $19.7 trillion, while actual real GDP = $19.0 trillion and the Price Level (GDP Deflator) = 210. A year later the Price Level = 214 and actual real GDP = $18.9. Based on their relative effects on the AD/AS model, which of the following scenarios best explains this new outcome? The effect of %3D Group of answer choices an increase in government spending is MORE than the effect of decreased electricity prices. an increase in wages is LESS than the effect of a decrease in government spending. a decrease in oil prices is MORE than the effect of positive consumer expectations. an increase in inflationary expectations is MORE than the effect of increased government spending.arrow_forwardWhat is the neoclassical zone of the SRAS curve? How much is the output level likely to change in the neoclassical zone?arrow_forwarda) In the classical model, what is the impact of changes in the demand for goods and services on aggregate output? b) Did classical economists pay much attention to the supply-side effects of changes in income tax rates in the nineteenth and early twentieth centuries? Why or why not? What about supply-side economics?arrow_forward
- How would a dramatic increase in the value of the stock market shift the AD curve? What effect would the shift have on the equilibrium level of GDP and the price level?arrow_forwardIf the price level increases, what happens to the consumption function? Why?arrow_forwardNow think about a major recession, like the one that occurred in 1982. (Hint: a major recession could be caused by a large shift to the left in the AD curve.) Why would a Keynesian policy make more sense in response to a major recession like the one that occurred in 1982? What would be the cost of following a neoclassical policy then?arrow_forward
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