The classical model uses the assumption that: OPTIONS: all wages and prices are flexible. monopoly is widespread in the economy. interest rates are not flexible. economic markets are fragile and have no tendency to move towards an equilibrium.

Q: Compare and contrast Neoclassical Economic Theory to Keynesian Economic Theory and post the…

A: Neoclassical economics is a theory that focuses on how the perception of efficacy or usefulness of…

Q: Consider Ricardian model with two countries, Home and Foreign, and three goods: Cloth, Food and…

A: Unit Labour Requirement is defined as the quantity of output which can be produced with a given unit…

Q: The Classical model for the labor market has the following: Wage Rate Firms looking for workers…

A: Equilibrium in labor market is where the labor demand curve intersects the labor supply curve.…

Q: Explain why classical assumptions are not realistic

A: Economics is the study of how the scarce resources of society are exploited. It is a social science…

Q: In the Classical model, an decrease in savings would result in Multiple Choice A rise in interest…

A: According to classical economics, saving was a rising function of the rate of interest. The…

Q: Which of these is the key assumption of the Neoclassical school of economic thought? Question 13…

A: Neoclassical school of economic thoughts is the revision of classical thoughts in some sense with…

Q: Why do neoclassical economists tend to put relatively more emphasis on long-term growth than on…

A: The Neoclassical economists were influenced by the policies and rules of the classical economists…

Q: Which of the following statements would most likely be made by someone following New Classical…

A: The follower of new classical economics does not believe in the active government intervention in…

Q: From a neoclassical view, which of the following is less important? fighting unemployment…

A: Neoclassical economics is a school of thought that emphasizes the importance of market mechanisms,…

Q: Consider a 2-sector macroeconomic model: Y = C + I* C = aY + b = [X]. Express this system in the…

A:

Q: the effect of a decrease in government spending in the classical model

A: Answer: Introduction: The classical economist believes in 'laissez-faire'. It means they deny the…

Q: Show how the Rational Expectations Model of the New Classical Economists proves the irrelevance of…

A: The term "economics" can be defined in a number of ways. It's the study of scarcity, specifically…

Q: Which of the following is not correct about the Classical economists’ argument? - They believe that…

A: Classical economists believed in Laissez-faire, which means minimum government intervention in the…

Q: What is the shape of the short run aggregate supply for the Neo Keynesian model used in class?…

A: A contemporary macroeconomic school of thinking that developed from classical Keynesian economics is…

Q: In the classical model with a closed economy, if the interest rate is too low, then investment is…

A: Higher interest rates discourage investment, since higher rates raise the cost of investing and…

Q: Suppose the following neoclassical (Cobb-Douglas) aggregate production function, of the Solow…

A: The production function represents the relationship between inputs and outputs in the production of…

Q: Keynesian economics is primarily focused on (A) national income (B) company balance (C) resource…

A: Keynesian economics, named after the English financial expert John Maynard Keynes, arose as a…

Q: In the aggregate demand curve, the endogenous variable is real money balances inflation the real…

A: In the demand and supply model, the equilibrium price and quantity are endogenous variables because…

Q: In neoclassical economic theory markets are relied on to allocate resources and distribute income –…

A: Market Failure refers to a situation when, the market mechanism, which is based on the forces of…

Q: How do Classical economists and Keynesian economists differ in their perceptions of how well markets…

A: The classical theory focuses on free markets and that the markets will regulate themselves when they…

Q: Which of the following statements is inconsistent with Classical Theory? A.The economy will…

A: According to the classical theory, the economy always produces near to the full-employment level of…

Q: True or False. The RBC (Real Business Cycle)model satisfies both welfare theorems, so the…

A: The Real Business Cycle (RBC) model is a macroeconomic framework that emphasizes fluctuations in…

Q: 3- one of the Assumptions of the classical model is 4- Money Illusion means john Maynard Keyrs…

A: Classical thoughts of school economist includes Adam Smith , J b say etc. Which believe on invisible…

Q: In the Neoclassical Model, which of the following is more likely to be associated with high level of…

A: The neoclassical model of macroeconomics states that the market condition will depend on demand and…

Q: Keynes and his followers believed that capitalism was one economic system that guaranteed full…

A: Changes in any component of spending—consumption, investment, or government spending—cause…

Q: summary of the key differences between Keynesian Economics and Classical/Neoclassical Economics

A: The classical economic theory assumed that if demand for a commodity or service increased, prices…

Q: Which of the following statements would most likely be made by someone following New Classical…

A: The new classical economists do not favor any active intervention in economic activities. They are…

Q: The use of money and credit controls to influence macroeconomic activity is:   A) monetary policy…

A: Controlling money refers to the control of the money supply in an economy as high and low money…

Q: Which of the following is consistent with the neoclassical theory of the labour?   Question 27…

A: According to the neoclassical model, the wage is determined by the marginal product on the demand…

Q: Suppose that the public’s taste changes in such a way that leisure comes to be more desirable than…

A: Taste: When desire, emotions, or preference of consumers change in favor of a product due to which…

Q: Consider Ricardian model with two countries, Home and Foreign, and three goods: Cloth, Food and…

A: Unit Labour Requirement is defined as the quantity of output which can be produced with a given unit…