2. The Keynesian and classical views of aggregate supplyIn the following table, match the macroeconomic assumptions about aggregate supply to the appropriate school of thought.AssumptionClassicalKeynesianProduct prices and production costs are flexible.OOOnly an increase in aggregate demand can move an economy out of a recession and back to Natural Real GDP quickly.OOThe economy naturally tends toward Natural Real GDP.Grade It NowSave & ContinueContinue without saving AttemptsAverage 33. Consumption and savingSuppose Rina gets a sales bonus at her place of work that gives her an extra $400 of disposable income. She chooses to spend $300 and save theremaining $100.From this, you can tell that Rina's marginal propensity to consume (MPC) is and her marginal propensity to save (MPS) isMathematically, it must always be true that:SavingConsumption - Disposable IncomeTherefore,Disposable Income + ConsumptionDisposable Income - ConsumptionMPS=

MPC (Marginal Propensity to Consume): This measures the portion of additional income that Rina…

Answered: 2. The Keynesian and classical views of…

Brief Principles of Macroeconomics (MindTap Course List)

8th Edition

ISBN:9781337091985

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter18: Six Debates Over Macroeconomic Policy

Section: Chapter Questions

Problem 2CQQ

See similar textbooks

Similar questions

The short run aggregate supply curve was constructed assuming that as the price of outputs increases, the puce of inputs stays the same. How would an increase in the prices of important inputs, like energy, affect aggregate supply?
If the economy is operating in the neoclassical zone of the SRAS curve and aggregate demand falls, what is likely to happen to teal GDP?
Attempts Average / 2 5. The aggregate supply curve in the simple Keynesian model Complete the following statement to make it true. "In the AD-AS framework, the simple Keynesian model includes an aggregate supply curve that Natural Real GDP." until the economy reaches its slopes upward Under what condition will an increase in total spending lead to an equivalent increase in Real GD O When the economy is producing more than Natural Real GDP. O When the economy is producing at Natural Real GDP. O When the economy is producing less than Natural Real GDP. O When the aggregate supply curve is vertical. is horizontal is vertical
Which of the following will NOT shift the ADT curve? O a. A rise in government spending O b. A rise in exports Ос. A rise in interest rates O d. A rise in consumer confidence
1Why low rate inflation is considered necessary for economic grwoth? Oa It does not affect the purchasing power of wages Ob. It indicates that the currency is in continuous demand by the people Oc taffects only the rich and not the poor Od itact as an incentive to boost in supply in the economy 2When the economy is in Keynesian macroeconomic equilibrium, planned investment is greater than actual investment. O a False O b. True 3Government fixes the floor and ceiling price which will not allow the producers to increase the price on their wish, this is a type of. O a Physical control called price pegging O b. Monetary policy control measures O. Physical control called price tagging Od. Fiscal policy control measures O e None 4Rising output coupled with falling prices is called stagflation O a. False O b. True 5The Value of marginal propensity to consume lies O a. O to 1 O b. Less than zero Oc -1 to 1 Od. Between O to 1 6The Central Bank way to control inflation is Oa Monetary policy…
Please provide a summary of these key points
29
"The following chart indicates the aggregate demand (AD) and short-run aggregate supply (SRAS) schedules of decision- makers for the current period. Both buyers and sellers previ- ously anticipated that the price level during the current period would be P 105 a. Indicate the quantity of GDP that will be produced during this period. b. Will it be a long-run equilibrium level of GDP? Why or why not? c. What will the relationship between the actual and natural rates of unemployment be during the period? Explain 20 your answer.
19. Which of the following statements concerning Keynesian analysis are true? Select one: a. Keynes's analysis started with the recognition that the total quantity demanded of an economy's output was the sum of three types of spending: consumer expenditure, planned investment spending, and government spending. Ob. Keynes recognized that equilibrium would occur in the economy when planned expenditure equals Actual expenditure O c All of the above are true. d. Keynes's analysis involves explaining why aggregate output is at a certain level by understanding what factors affect each component of aggregate demand and how the sum of these components could add up to an output smaller or greater than the economy is capable of producing
You are hired by the Council of Economic Advisors (CEA) as an economic consultant.The chairperson of the CEA tells you that she believes the current unemployment rate istoo high. The unemployment rate can be reduced if aggregate output increases. She wantsto know what policy to pursue to increase aggregate output by 300 billion TL. The bestestimate she has for the MPC is 0.8. Which of the following policies should yourecommend?a) Increase government purchases by 75 billion TL.b) Reduce taxes by 75 billion TL.c) Reduce taxes by 75 billion TL and to increase government purchases by 75 billion TL.d) Reduce the budget deficit by 300 billion TL
Consider the basic AD/AS macro model in long-run equilibrium that experiences a positive AD shock. In the short run, the price level and output In the long run, the price level and output O a. Decreases; decreases; decreases further; decreases further. O b. Decreases; decreases; decreases further; returns to potential output. O c. Increases; increases; increases further; increases further. O d. Increases; decreases; increases further; returns to potential output. O e. Increases; increases; increases further; returns to potential output.
Please provide a summary of these key points

SEE MORE QUESTIONS

Recommended textbooks for you

Brief Principles of Macroeconomics (MindTap Cours…

Economics

ISBN:

9781337091985

Author:

N. Gregory Mankiw

Publisher:

Cengage Learning

Principles of Economics 2e

Economics

ISBN:

9781947172364

Author:

Steven A. Greenlaw; David Shapiro

Publisher:

OpenStax

Essentials of Economics (MindTap Course List)

Economics

ISBN:

9781337091992

Author:

N. Gregory Mankiw

Publisher:

Cengage Learning

Brief Principles of Macroeconomics (MindTap Cours…

Economics

ISBN:

9781337091985

Author:

N. Gregory Mankiw

Publisher:

Cengage Learning

Principles of Economics 2e

Economics

ISBN:

9781947172364

Author:

Steven A. Greenlaw; David Shapiro

Publisher:

OpenStax

Essentials of Economics (MindTap Course List)

Economics

ISBN:

9781337091992

Author:

N. Gregory Mankiw

Publisher:

Cengage Learning

Principles of Economics (MindTap Course List)

Economics

ISBN:

9781305585126

Author:

N. Gregory Mankiw

Publisher:

Cengage Learning

Principles of Macroeconomics (MindTap Course List)

Economics

ISBN:

9781285165912

Author:

N. Gregory Mankiw

Publisher:

Cengage Learning

Principles of Economics, 7th Edition (MindTap Cou…

Economics

ISBN:

9781285165875

Author:

N. Gregory Mankiw

Publisher:

Cengage Learning

SEE MORE TEXTBOOKS