In the neoclassical view of the economy, expansionary fiscal policy cannot work to raise equilibrium output because a. flexible prices will eventually choke off any increase in aggregate demand. b. it will dis - incentivize production. c. it will raise unemployment. d. It reduces aggregate output.
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- Suppose the economy goes into a recession. Which statement reflects a Keynesian response, and which reflects a neoclassical response? A. "The recession is likely caused by bad government policy, so active policy to solve the problem should be avoided" B. "The government should use fiscal policy to boost spending" 1. Neoclassical 2. KeynesianOne way that the government can increase aggregate demand is by: A. reducing income taxes. B. increasing the interest rates. C. reducing government spending. D. increasing business taxes.Economist who generally empgasize the importance of aggregate supply in determining the size of the macroeconomiy over the long run a- says law b-Neoclassical economists c-Keynes lasw dk- Neoclassical zone
- Match the policies below to whether they would be said by a Keynesian or Neoclassical economist: A. Policy should concentrate on minimizing cyclical unemployment B. Since the long-run aggregate supply curve is fixed, increasing aggregate demand too much will just lead to inflation 1. Neoclassical 2. KeynesianReferring to the figure, an increase in government purchases will A. shift aggregate demand from AD1 to AD3. B. have no effect on aggregate demand. C. shift aggregate demand from AD1 to AD2. D. cause movement from point A to point B along AD1.1. When the federal government engages in COVID-19 fiscal stimulus such as the Coronavirus Aid, Relief, and Economic Security (CARES) Act and the American Rescue Plan Act this will affect the AD-AS model by: Group of answer choices a. Decreasing aggregate demand (AD). b. Increasing aggregate demand (AD). c. Decreasing aggregate supply (AS). d. Increasing aggregate supply (AS).
- n the AD-AS model, if there's a sudden increase in consumer confidence leading to more spending, what is the immediate expected impact on the Aggregate Demand (AD) curve? This is a multi answer question. You can select one or more options as the answer. A. The AD curve shifts to the left. B. The AD curve remains unchanged. C. The AD curve shifts to the right. D. The direction of the AD shift is unpredictableSuppose that the graph below represents the aggregate demand (AD) and aggregate supply (AS) of Guadeloupe. What will happen to Guadeloupe's economy in the long-run, according to the neoclassical view? Potential GDP OO Price Level AS AD Real GDP Guadeloupe's aggregate supply (AS) will shift to the left. Guadeloupe's potential GDP line will shift to the right. Guadeloupe's aggregate supply (AS) will shift to the right. Guadeloupe's aggregate demand (AD) will shift to the left.In the neoclassical model, if there is a sudden rise in the aggregate demand curve, in the short and long run it will cause O inflation. deflation. O an increase in output. A and C
- How does the aggregate demand and supply model reflect a decrease in taxes? Select one: a. Consumption increases, so aggregate demand shifts right. b. Consumption increases, so aggregate supply shifts right. c. Consumption decreases, so aggregate supply shifts left. d. Consumption decreases, so aggregate demand shifts left. Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.What are the likely consequences of a government implementing a policy of austerity during a period of economic recession? A. It would stimulate economic growth by increasing consumer confidence. B. It would lead to a decrease in the unemployment rate. C. It would potentially deepen the recession by reducing overall demand. D. It would have no effect on the economy's performance.Which economic school relies most heavily on "sticky prices" to explain the effects of Aggregate Demand on GDP? A. Keynesian B. Monoetarist C. Rational Expectations D. Coordination Failure