Macroeconomics
10th Edition
ISBN: 9780134896441
Author: ABEL, Andrew B., BERNANKE, Ben, CROUSHORE, Dean Darrell
Publisher: PEARSON
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Notice the major differences between our
Keynesian Cross (in your chapter 9 appendix)
and the Macro Equilibrium (AS and AD)
diagram? Which model has more to offer in
which situations?
Question Two
a) Use the Keynesian Cross to derive the IS
curve
Consider a simple Keynesian model. Which of the following will decrease planned aggregate expenditure?
Government closes schools as a part of major restructureHouseholds prefer homemade meals to restaurant mealsAll the other optionsBusiness profitability is expected to go down
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- How is Keynes position different from classical position with respect to wages, prices, and Say’s law?.arrow_forwardSome of the practical problems relating to implementing expansionary Keynesian policy relate to lags. What are these lags and why are they problematic? It’s crucial to use some sort of example. arrow_forwardThe multiplier in the Keynesian model equals:arrow_forward
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- How would the level of aggregate demand be affected by a rise in the interest rate in the Keynesian theory? Which components would be affected most strongly?arrow_forwardAccording to the Keynesian model, which of the following would increase aggregate demand the most? a. Government drops the taxes for private businesses b. Government establishes a new agency financed by the government that helps the unemployed to find a job Increase in interest rates that results in the growth in investments into new equipment to O d. A decrease in government expenditures accompanied by the decrease in taxes e. Government expands its social projects and increases taxes to balance the budgetarrow_forwardUsing appropriate real-life macroeconomic example(s), compare and contrast Keynes' Law and Say's Law as they relate to aggregate demand and aggregate supply.arrow_forward
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