8. Read these recent quotes (taken from blogs) below and determine whether the sentiment inthe quote is Keynesian or Classical. Just write “Keynesian” or “Classical” in the space rightafter the Ph.D. economist’s name: a) “Market economies are not self-stabilizing and they do not quickly adjust to findthe socially optimal employment rate in the absence of active stabilizationpolicies.” – Economist Roger Farmer b) “The paradox of thrift purportedly shows that saving is bad and results in poverty.Well, it (saving) isn't that bad, because here we have the recognition that addedsaving results in lower interest rates and more investment.” – Economist BillWoolsey c) “In much of the world, there is insufficient demand to fully employ the valuableservices of available humans and machines. This characterization of the globaleconomy has been true for the past seven years. It seems likely to be true for yearsto come.” – Economist Nararyana Kocherlakota d) “The economic cost of unemployment includes (though is certainly not limited to)all the goods and services that could have been produced, had these folks beenworking. The current problem is that the demand in the private sector is notsufficient for businesses to justify hiring them.” –Economist Carl Brown e) “There was no fiscal multiplier effect when the Federal government suddenlyreduced the deficit from $1060 billion in calendar 2012 to $560 billion in 2013...”– Economist Scott Sumner f) “But we are living in a world where, for the time being — and maybe for a longtime to come, if secular stagnation theorists are right — mercantilism makes a fairbit of sense.” – Nobel Economist Paul Krugman

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter26: The Neoclassical Perspective

Section: Chapter Questions

Problem 20CTQ: Is it a logical contradiction to be a neoclassical Keynesian? Explain.

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Question

8. Read these recent quotes (taken from blogs) below and determine whether the sentiment in
the quote is Keynesian or Classical. Just write “Keynesian” or “Classical” in the space right
after the Ph.D. economist’s name:

a) “Market economies are not self-stabilizing and they do not quickly adjust to find
the socially optimal employment rate in the absence of active stabilization
policies.” – Economist Roger Farmer

b) “The paradox of thrift purportedly shows that saving is bad and results in poverty.
Well, it (saving) isn't that bad, because here we have the recognition that added
saving results in lower interest rates and more investment.” – Economist Bill
Woolsey

c) “In much of the world, there is insufficient demand to fully employ the valuable
services of available humans and machines. This characterization of the global
economy has been true for the past seven years. It seems likely to be true for years
to come.” – Economist Nararyana Kocherlakota

d) “The economic cost of unemployment includes (though is certainly not limited to)
all the goods and services that could have been produced, had these folks been
working. The current problem is that the demand in the private sector is not
sufficient for businesses to justify hiring them.” –Economist Carl Brown

e) “There was no fiscal multiplier effect when the Federal government suddenly
reduced the deficit from $1060 billion in calendar 2012 to $560 billion in 2013...”
– Economist Scott Sumner

f) “But we are living in a world where, for the time being — and maybe for a long
time to come, if secular stagnation theorists are right — mercantilism makes a fair
bit of sense.” – Nobel Economist Paul Krugman

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