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1. Questioning the classical position Keynes believed that an economy is not necessarily self-regulating. Which of the following are aspects of Keynes's critique of classical economics? Check all that apply. The economy quickly adjusts to a long-run equilibrium. Say's law holds. Wages and prices may be inflexible. The economy is inherently unstable. The following graph shows the aggregate demand (AD), short-run aggregate supply (SRAS), and long-run aggregate supply (LRAS) curves of an economy. PRICE LEVEL 300 270 240 AD 210 180 150 120+ * + 90 60 30 0 0 100 200 C LRAS SRÅS 300 400 500 600 700 800 900 1000 REAL GDP (Billions of dollars) Point A on the graph shows the state of the economy in move to point B via self-regulation, move to point C via government intervention, move to point C via self- regulation, or get stuck at point A for an extended period Long-run equilibrium, an inflationary gap, or a recessionary gap Keynesian economists believe that the economy might

1. Questioning the classical position Keynes believed that an economy is not necessarily self-regulating. Which of the following are aspects of Keynes's critique of classical economics? Check all that apply. The economy quickly adjusts to a long-run equilibrium. Say's law holds. Wages and prices may be inflexible. The economy is inherently unstable. The following graph shows the aggregate demand (AD), short-run aggregate supply (SRAS), and long-run aggregate supply (LRAS) curves of an economy. PRICE LEVEL 300 270 240 AD 210 180 150 120+ * + 90 60 30 0 0 100 200 C LRAS SRÅS 300 400 500 600 700 800 900 1000 REAL GDP (Billions of dollars) Point A on the graph shows the state of the economy in move to point B via self-regulation, move to point C via government intervention, move to point C via self- regulation, or get stuck at point A for an extended period Long-run equilibrium, an inflationary gap, or a recessionary gap Keynesian economists believe that the economy might

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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TOPIC: Questioning the classical position
1. Questioning the classical position Keynes believed that an economy is not necessarily self-regulating. Which of the following are aspects of Keynes's critique of classical economics? Check all that apply. The economy quickly adjusts to a long-run equilibrium. Say's law holds. Wages and prices may be inflexible. The economy is inherently unstable. The following graph shows the aggregate demand (AD), short-run aggregate supply (SRAS), and long-run aggregate supply (LRAS) curves of an economy. PRICE LEVEL 300 270 240 AD 210 180 150 120+ * + 90 60 30 0 0 100 200 C LRAS SRÅS 300 400 500 600 700 800 900 1000 REAL GDP (Billions of dollars) Point A on the graph shows the state of the economy in move to point B via self-regulation, move to point C via government intervention, move to point C via self- regulation, or get stuck at point A for an extended period Long-run equilibrium, an inflationary gap, or a recessionary gap Keynesian economists believe that the economy might
Transcribed Image Text:1. Questioning the classical position Keynes believed that an economy is not necessarily self-regulating. Which of the following are aspects of Keynes's critique of classical economics? Check all that apply. The economy quickly adjusts to a long-run equilibrium. Say's law holds. Wages and prices may be inflexible. The economy is inherently unstable. The following graph shows the aggregate demand (AD), short-run aggregate supply (SRAS), and long-run aggregate supply (LRAS) curves of an economy. PRICE LEVEL 300 270 240 AD 210 180 150 120+ * + 90 60 30 0 0 100 200 C LRAS SRÅS 300 400 500 600 700 800 900 1000 REAL GDP (Billions of dollars) Point A on the graph shows the state of the economy in move to point B via self-regulation, move to point C via government intervention, move to point C via self- regulation, or get stuck at point A for an extended period Long-run equilibrium, an inflationary gap, or a recessionary gap Keynesian economists believe that the economy might
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