According to classical economists economy produces-----level of GDP. According to Keynes economy produces------level of GDP. Full employment, equilibrium Equilibrium, full employment Less than full employment, less than equilibrium More than equilibrium, more than full employment

Q: Keynes believed that prices and wages were rigid or fixed until the economy reaches equilibrium full…

A: "Keynesian economics" is a type economic theory that is established by the British economist John…

Q: a ressionary gap look like on a graph and how does recessionary gap connect with current economic…

A: Since you have posted a question with multiple sub-parts, we will solve the first three sub-parts…

Q: Assume a closed economy: Y=C+I+G In the Keynesian Cross model, as in the slides, assuming the…

A: Keynesian Cross Model assumes that the initial autonomous expenses on the three major components of…

Q: One of Friedman’ s criticisms of Keynes was Multiple Choice   current consumption depends only on…

A: When understanding the nature and functioning of an economy, there are various theories developed by…

Q: A key result of the equilibrium aggregate expenditure model is that it:   Question 27 options: a…

A: Aggregate expenditure model Equilibrium therefore, the economy is continually moving towards an…

Q: The demand for Home output from foreign countries increased in an economy which was initially in the…

A: In an open economy, foreign consumers can make the demand for home output and the quantity sold to…

Q: According to Keynes’ Law... Group of answer choices The total demand tends to rise above the total…

A: Keynesian economics is highly significant to explain the nature of a market using a specfiic…

Q: When Full employment GDP is less than equilibrium GDP, the economy faces A) Recession B) Inflation…

A: Full employment refers to the economic situation where all the labor resources in the economy are…

Q: An overheated economy is most likely to result in: price stability high inflation stagflation…

A: A country's economy often overheats when supply is less than the demand. The price of goods and…

Q: a. You are studying an economy with an income tax rate, t1, of 32% and an MPS of 0.3.  It is…

A: Answer: Given: Income tax rate = 32% = 0.32 MPS (marginal propensity to save) = 0.3 MPC (marginal…

Q: Calculate the rate of inflation when the Consumer Price Index went from 200 to 208.  Of the 200…

A: “Since you have posted a question with multiple sub parts, we will provide the solution only to the…

Q: Consider a keynesian macromodel Y=(C0+G+I) / (1-c) where C0 is autonomus consumption, G is…

A: The investment level and the interest rates have an inverse relationship. Interest rates influence…

Q: 20. In the Keynesian model, a fall in the interest rate will shift the aggregate expenditure line…

A: Keynesian economics refers to the macroeconomic theory that shows the total spending for the economy…

Q: If an increase in aggregate expenditures results in no increase in real GDP we can surmise that the:…

A: Real Gross Domestic Product (GDP) is a measure of the value of all goods and services produced…

Q: Assume that the economy has an inflationary gap. Explain how the economy will remove this gap…

A: An inflationary gap measures the difference between the actual production of the economy and the…

Q: Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an…

A: Equilibrium refers to an economic condition where both aggregate demand and aggregate supply are…

Q: False : A recessionary gap can be caused by consumers who spend more than the

A: Recessive gap. Occurs when real GDP (more than full employment) falls below potential GDP, which…

Q: Suppose the economy experiences a "supply shock" due to a fall in oil prices. As a result, the…

A: Gross Domestic Product (GDP) refers to the total or final value of all the goods and services that…

Q: . What is the equilibrium rate of real GDP?        $  __ billion   b. If full-employment real…

A: Aggregate demand represents the total amount of goods and services that buyers in an economy are…

Q: Calculate the GDP loss if the actual GDP produced in 2018 was $ 8200b with the unemployment rate of…

A: Given information Equilibrium GDP=$8200 Unemployment rate=7.8% Okun's Law is used for the empirical…

Q: b) Explain how borrowing constraints can impede the process of consumption smoothing. If many…

A: In the short run, the simple Keynesian model assumes that goods prices remain constant and that the…

Q: An inflationary gap is the amount by which aggregate expenditures ____ the amount required to…

A: Inflationary gap refers to the situation when current level of output (current GDP) exceeds…

Q: Complete the following table by filling in the blanks. (Hint: In the table, Q Real GDP and QN…

A: Real GDP refers to the value of all goods and services  adjusted for price changes produces in the…

Q: In The General Theory of Employment, Interest, and Money, Keynes... A. recommended international…

A: With his General Theory of Employment, Interest and Money, Keynes transformed economics and changed…

Q: Country X's long run full employment level of Real GDP is estimated to be $22,900,000. However, the…

A: In macroeconomics, understanding the concept of potential output and its relationship with actual…

Q: Use the Keynesian cross to predict the impact of the following on equilibrium income. Use dia- grams…

A: a) An increase in government purchase:-  Economic factors don't really propel the economy to full…

Q: The Keynesian cross 45 degree line represents: Every point where aggregate expenditure is equal to…

A: The Keynesian model is a framework that emphasizes the role of aggregate demand in influencing…

Q: An economy is at full employment. Which of the following can create an inflationary gap. Group of…

A: An inflationary gap exists when the demand for goods and services exceeds production due to factors…

Q: Keynes believed that an increase in government expenditure during a recession would not result in…

A: Inflation refers to the situation of increasing price level in the economy.

Q: ou are studying an economy with an income tax rate, t1, of 32%and an MPS of 0.3. It is currently…

A: Given:   Income tax rate = 32% MPS = 0.3 Recessionary gap = $500