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: The following Mundell-Fleming model of a small, open economy will be used in all numerical…

A: IS curve: IS curve shows different combinations of interest rate and the income. Such that for each…

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: "Marx started from the proposition that capitalists aim to accumulate ever-increasing wealth by…

A: Karl Marx's theory of surplus value is a central concept in his critique of political economy and…

Q: If a macroeconomist studying the causes of unemployment suspects that changes in technology might…

A: In macro-econometric models there are two types of variables: endogenous and exogenous. Exogenous…

Q: Review the neoclassical model's basic microeconomic presumptions regarding customer behavior.

A: Neoclassical model: This term refers to a model in which supply and demand is used to account for…

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: Which of the following statements best represents the relationship between Keynesian and…

A: According to Keynesian perspective, polices of fiscal and monetary is used in short run to balance…

Q: Think back to August 6, 1945. The United States has just dropped an atomic weapon on the city of…

A: It was during the 1939 gathering of dark war clouds over Europe that Keynes saw it as an opportunity…

Q: Explain what the neoclassical perspective on macroecomics emphasizes and briefly discuss its overall…

A:

Q: In both the classical and Keynesian model, the interest rate falls in a recession. O True O False

A: The amount being due per period being as a proportion of the amount that is either being deposited,…

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: In neoclassical economics, if there is unemployment, it means that:

A: Neoclassical believes in wage flexibility

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: The variable of most interest in economics is not:     HH welfare in the aggregate     Economic…

A: Economic welfare is the summation of prouder surplus and consumer surplus that obtained in an…

Q: According to Keynesian economics, what is the suggested approach to address a recession? A) Reduce…

A: Keynesian economics is an economic theory developed by John Maynard Keynes, particularly during 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: ccording to the British economist John Maynard Keynes, economic instability was a product of…

A: John Maynard Keynes was a British economist who lived from 1883 until 1946. He is best known as the…

Q: Explain how Milton Friedman's economic views differed from those of Keynes and explain why more…

A: John Maynard Keynes, a revolutionary economist of the 1930s, had published his book, "General…

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: 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: For a competitive equilibrium in a two-period model, must there be an equal amount of borrowing and…

A: Two-period model shows how the consumers trade off their current consumption with the future…

Q: Aggregate Demand (AD) - According to the Total Supply (AS) Model, by comparing the initial…

A: The equilibrium situation with the two developments as the increase in the transfer expenditures of…

Q: The Paradox of Thrift: Consider the simple model of the good markets: Y = C +I+G C = Co + C1(Y – T)…

A: Savings is referred to the amount of money that a person has left over after deducting their…

Q: List three of the extensions of the Ricardian model. Explain how each extension differs from the…

A: The Ricardian Model of Trade is created by English political financial specialist David Ricardo in…

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: In the basic New Keynesian model. suppose that the anticipated future rate of inflation goes up due…

A: The basic new Keynesian model beleives in the change sin aggregate demand, which further lead to…

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: Explain what stability means in the context of the econ/stats class.

A: Economic stability refers to a state of an economy where key economic variables, such as prices,…

Q: eynesian economist was offering policy advice to stimulate an economy, which of the followings O…

A: The issue you raised is in the discipline of economics, specifically in the subfield of…

Q: Consider the following macroeconomic model: Y=C+ Io + Go C=a+b(Y-T) T=d+tY Where the endogenous…

A: Disclaimer: providing the solution to the first three sub-parts.

Q: According to Keynesian Theory, stabilization policy (i.e. Aggregate Demand Management) should not be…

A: Uncertainty refers to a state of incomplete knowledge or information about future events, outcomes,…