Which of the following statements about Keynes' contribution to macroeconomics is correct? A. Although he published his most important ideas about the economy long before the 1930s, few economists paid attention to Keynes until the Great Depression proved him correct B. Keynes argued that depressions and recessions were almost always caused by changes in the money supply C. Keynes argued that balancing the budget could be an effective way to cure a recession or depression D. All of the above E. None of the above

Which of the following statements about Keynes' contribution to macroeconomics is correct? A. Although he published his most important ideas about the economy long before the 1930s, few economists paid attention to Keynes until the Great Depression proved him correct B. Keynes argued that depressions and recessions were almost always caused by changes in the money supply C. Keynes argued that balancing the budget could be an effective way to cure a recession or depression D. All of the above E. None of the above

Principles of Economics (MindTap Course List)

8th Edition

ISBN:9781305585126

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter34: The Influence Of Monetary And Fiscal Policy On Aggregate Demand

Section: Chapter Questions

Problem 4CQQ

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Which of the following statements about Keynes' contribution to macroeconomics is correct? A Keynes argued that balancing the budget could be an effective way to cure a recession or depression. B Keynes argued that depressions and recessions were almost always caused by changes in the money supply. none of the others Although he published his most important ideas about the economy long before the 1930s, few economists paid attention to Keynes until the Great Depression proved him correct.
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There are the three reas0ns why aggregate demand is d0wnward sl0pe: real wealth effect, interest rate effect, exchange rate effect. In a case scenari0, the market saw an increase in c0nsumer spending when there is a b00m in ec0n0my. 0r the ec0n0mic crisis makes the public bit shy t0 buy 0r c0nsume any pr0duct. In the ab0ve tw0 situati0ns: the transfer payment d0es n0t make the part 0f g0vernment spending as the public will spend the m0ney given as self-security and unempl0yment. Exp0rt situati0n gets w0rse as the f0reigners are reluctant t0 buy expensive g00ds and the g0vernment will make s0me imp0rts. The b0rr0wing has bec0me easy and l0ans are issued at a cheaper rate t0 buy car. F0ll0wing the equati0n: Y = C + I + G + NX will the bel0w examples increase 0r decrease the aggregate demand in Indian? What will be the shift in p0siti0n f0r bel0w situati0ns? An increase in transfer payment A decrease in real interest rate in India
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Suppose that in Macroland the consumption and the investment have a negative relationship withthe real interest rate and positive relationship with Y. The Central Bank of the country targets acertain nominal interest rate and lets the money supply adjust in order to reach that interest rate.a. Draw a graph of the IS-LM model in this situation.b. Suppose that the Central Bank announces an increase of the interest rate in the future.Represent graphically the initial position of IS-LM curves. Then, show the IS-LM curves of thefuture, after the announced increase in the interest rate is implemented. (Assume that the ISis constant.).c. Suppose that agents today take into consideration the resulting income of the future whendeciding the amount of consumption and investment. Show what happens to the IS-LMcurves today after the announcement of the CB (tip: the CB is NOT increasing the nominalinterest rate today).d. The government decides to step in and avoid any deviation of Y from the initial…
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