Illustrate the Keynesian economist explanation of the recessionary gap.

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Answer 1

Question

Chapter 10, Problem 1VQP

To determine

Illustrate the Keynesian economist explanation of the recessionary gap.

Expert Solution & Answer

Explanation of Solution

If the economy is in the recessionary gap, then the level of output is less than the full employment level and there is surplus in the labor market. If the wages are flexible, then the short run aggregate supply (SRAS) curve shifts rightward.

The Keynesian economists consider that the wages are strictly downward. The short run aggregate supply (SRAS) curve will not shift rightward and therefore, the economy will not remove itself from a recessionary gap.

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Answer 2

Question

Chapter 10, Problem 1VQP

To determine

Illustrate the Keynesian economist explanation of the recessionary gap.

Expert Solution & Answer

Explanation of Solution

If the economy is in the recessionary gap, then the level of output is less than the full employment level and there is surplus in the labor market. If the wages are flexible, then the short run aggregate supply (SRAS) curve shifts rightward.

The Keynesian economists consider that the wages are strictly downward. The short run aggregate supply (SRAS) curve will not shift rightward and therefore, the economy will not remove itself from a recessionary gap.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 3

Question

Chapter 10, Problem 1VQP

To determine

Illustrate the Keynesian economist explanation of the recessionary gap.

Expert Solution & Answer

Explanation of Solution

If the economy is in the recessionary gap, then the level of output is less than the full employment level and there is surplus in the labor market. If the wages are flexible, then the short run aggregate supply (SRAS) curve shifts rightward.

The Keynesian economists consider that the wages are strictly downward. The short run aggregate supply (SRAS) curve will not shift rightward and therefore, the economy will not remove itself from a recessionary gap.

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Answer 4

Question

Chapter 10, Problem 1VQP

To determine

Illustrate the Keynesian economist explanation of the recessionary gap.

Expert Solution & Answer

Explanation of Solution

If the economy is in the recessionary gap, then the level of output is less than the full employment level and there is surplus in the labor market. If the wages are flexible, then the short run aggregate supply (SRAS) curve shifts rightward.

The Keynesian economists consider that the wages are strictly downward. The short run aggregate supply (SRAS) curve will not shift rightward and therefore, the economy will not remove itself from a recessionary gap.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 10, Problem 1VQP

To determine

Illustrate the Keynesian economist explanation of the recessionary gap.

Expert Solution & Answer

Explanation of Solution

If the economy is in the recessionary gap, then the level of output is less than the full employment level and there is surplus in the labor market. If the wages are flexible, then the short run aggregate supply (SRAS) curve shifts rightward.

The Keynesian economists consider that the wages are strictly downward. The short run aggregate supply (SRAS) curve will not shift rightward and therefore, the economy will not remove itself from a recessionary gap.

Answer 6

Chapter 10, Problem 1VQP

To determine

Illustrate the Keynesian economist explanation of the recessionary gap.

Expert Solution & Answer

Explanation of Solution

If the economy is in the recessionary gap, then the level of output is less than the full employment level and there is surplus in the labor market. If the wages are flexible, then the short run aggregate supply (SRAS) curve shifts rightward.

The Keynesian economists consider that the wages are strictly downward. The short run aggregate supply (SRAS) curve will not shift rightward and therefore, the economy will not remove itself from a recessionary gap.

Answer 7

Chapter 10, Problem 1VQP

To determine

Illustrate the Keynesian economist explanation of the recessionary gap.

Answer 8

Expert Solution & Answer

Explanation of Solution

If the economy is in the recessionary gap, then the level of output is less than the full employment level and there is surplus in the labor market. If the wages are flexible, then the short run aggregate supply (SRAS) curve shifts rightward.

The Keynesian economists consider that the wages are strictly downward. The short run aggregate supply (SRAS) curve will not shift rightward and therefore, the economy will not remove itself from a recessionary gap.