Identify the business cycle theory that supports unemployment as a cause of less government spending.

Question

Want to see more full solutions like this?

Answer 1

Question

Chapter 12, Problem 1SPA

(a)

To determine

Identify the business cycle theory that supports unemployment as a cause of less government spending.

(a)

Expert Solution

Explanation of Solution

The mainstream theory of business cycle supports the claim that insufficient government spending causes high unemployment in the economy. It is because this theory states that recession causes unemployment. The different forms of mainstream theory such as the Keynesian cycle theory and New Keynesian cycle theory explains that only government spending can eliminate the recessionary gap, thereby reduces the unemployment rate in an economy. Hence, the mainstream theory supports that the first economist is correct.

Economics Concept Introduction

Business cycle: The term business cycle refers to the repeated ups and downs in the level of economic activity that extend for several years.

(b)

To determine

Identify the business cycle theory that supports unemployment as a cause of structural problem.

(b)

Expert Solution

Explanation of Solution

The real business cycle (RBC) theory supports the claim that structural problem causes high unemployment in an economy. This is because RBC states that ‘random fluctuations in the productivity’ is the main source of economic fluctuations. Therefore, the rate of technological change is the impulse that generates business cycle, thereby the structural unemployment in the economy. Hence, the real business cycle theory says that the second economist is correct.

Economics Concept Introduction

Business cycle: The term business cycle refers to the repeated ups and downs in the level of economic activity that extend for several years.

Want to see more full solutions like this?

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

Students have asked these similar questions

Please answer questions D-H, I have already answered A , B,C but it may help you to still solve them yourself. Thank you!

2. A firm’s production function is given by:Q = 10KLThe unit capital and labour costs are 2 and 1 pounds respectively. The firm is contracted to produce2000 units.(a) Write out the optimisation problem of the firm. (b) Express this problem using a Lagrangian function. (c) Find values of K and L which fulfil the contract with minimal cost to the firm. (d) Calculate the total cost to the firm.

3. Consider the following estimated regression equation, estimated using a sample of firms, where RDis total firm spending on research and development in USD ($), Revenue is total firm revenuein USD ($), and W ages is the firms’ total spending on wages in USD ($) (standard errors inparentheses):RDd = 1000(600)+ 0.5(0.1)Revenue + 1.5(0.5)W ages,(a) Interpret the coefficients on each of the explanatory variables. (b) Which of the three coefficients are statistically significant at the 5% level of significance? Howdo you know? A researcher runs a two-sided statistical test of the null hypothesis that both the coefficients onthe explanatory variables above are jointly equal to 0.25 (mathematically, that β1 = β2 = 0.25),and reports a p-value of 0.045.(c) What does this p-value mean for the outcome of the test? (d) What would an appropriate two-sided alternative hypothesis look like?

Answer 2

Question

Chapter 12, Problem 1SPA

(a)

To determine

Identify the business cycle theory that supports unemployment as a cause of less government spending.

(a)

Expert Solution

Explanation of Solution

The mainstream theory of business cycle supports the claim that insufficient government spending causes high unemployment in the economy. It is because this theory states that recession causes unemployment. The different forms of mainstream theory such as the Keynesian cycle theory and New Keynesian cycle theory explains that only government spending can eliminate the recessionary gap, thereby reduces the unemployment rate in an economy. Hence, the mainstream theory supports that the first economist is correct.

Economics Concept Introduction

Business cycle: The term business cycle refers to the repeated ups and downs in the level of economic activity that extend for several years.

(b)

To determine

Identify the business cycle theory that supports unemployment as a cause of structural problem.

(b)

Expert Solution

Explanation of Solution

The real business cycle (RBC) theory supports the claim that structural problem causes high unemployment in an economy. This is because RBC states that ‘random fluctuations in the productivity’ is the main source of economic fluctuations. Therefore, the rate of technological change is the impulse that generates business cycle, thereby the structural unemployment in the economy. Hence, the real business cycle theory says that the second economist is correct.

Economics Concept Introduction

Business cycle: The term business cycle refers to the repeated ups and downs in the level of economic activity that extend for several years.

Want to see more full solutions like this?

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

Answer 3

Question

Chapter 12, Problem 1SPA

(a)

To determine

Identify the business cycle theory that supports unemployment as a cause of less government spending.

(a)

Expert Solution

Explanation of Solution

The mainstream theory of business cycle supports the claim that insufficient government spending causes high unemployment in the economy. It is because this theory states that recession causes unemployment. The different forms of mainstream theory such as the Keynesian cycle theory and New Keynesian cycle theory explains that only government spending can eliminate the recessionary gap, thereby reduces the unemployment rate in an economy. Hence, the mainstream theory supports that the first economist is correct.

Economics Concept Introduction

Business cycle: The term business cycle refers to the repeated ups and downs in the level of economic activity that extend for several years.

(b)

To determine

Identify the business cycle theory that supports unemployment as a cause of structural problem.

(b)

Expert Solution

Explanation of Solution

The real business cycle (RBC) theory supports the claim that structural problem causes high unemployment in an economy. This is because RBC states that ‘random fluctuations in the productivity’ is the main source of economic fluctuations. Therefore, the rate of technological change is the impulse that generates business cycle, thereby the structural unemployment in the economy. Hence, the real business cycle theory says that the second economist is correct.

Economics Concept Introduction

Business cycle: The term business cycle refers to the repeated ups and downs in the level of economic activity that extend for several years.

Want to see more full solutions like this?

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

Answer 4

Question

Chapter 12, Problem 1SPA

(a)

To determine

Identify the business cycle theory that supports unemployment as a cause of less government spending.

(a)

Expert Solution

Explanation of Solution

The mainstream theory of business cycle supports the claim that insufficient government spending causes high unemployment in the economy. It is because this theory states that recession causes unemployment. The different forms of mainstream theory such as the Keynesian cycle theory and New Keynesian cycle theory explains that only government spending can eliminate the recessionary gap, thereby reduces the unemployment rate in an economy. Hence, the mainstream theory supports that the first economist is correct.

Economics Concept Introduction

Business cycle: The term business cycle refers to the repeated ups and downs in the level of economic activity that extend for several years.

(b)

To determine

Identify the business cycle theory that supports unemployment as a cause of structural problem.

(b)

Expert Solution

Explanation of Solution

The real business cycle (RBC) theory supports the claim that structural problem causes high unemployment in an economy. This is because RBC states that ‘random fluctuations in the productivity’ is the main source of economic fluctuations. Therefore, the rate of technological change is the impulse that generates business cycle, thereby the structural unemployment in the economy. Hence, the real business cycle theory says that the second economist is correct.

Economics Concept Introduction

Business cycle: The term business cycle refers to the repeated ups and downs in the level of economic activity that extend for several years.

Want to see more full solutions like this?

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

Answer 5

Chapter 12, Problem 1SPA

(a)

To determine

Identify the business cycle theory that supports unemployment as a cause of less government spending.

(a)

Expert Solution

Explanation of Solution

The mainstream theory of business cycle supports the claim that insufficient government spending causes high unemployment in the economy. It is because this theory states that recession causes unemployment. The different forms of mainstream theory such as the Keynesian cycle theory and New Keynesian cycle theory explains that only government spending can eliminate the recessionary gap, thereby reduces the unemployment rate in an economy. Hence, the mainstream theory supports that the first economist is correct.

Economics Concept Introduction

Business cycle: The term business cycle refers to the repeated ups and downs in the level of economic activity that extend for several years.

(b)

To determine

Identify the business cycle theory that supports unemployment as a cause of structural problem.

(b)

Expert Solution

Explanation of Solution

The real business cycle (RBC) theory supports the claim that structural problem causes high unemployment in an economy. This is because RBC states that ‘random fluctuations in the productivity’ is the main source of economic fluctuations. Therefore, the rate of technological change is the impulse that generates business cycle, thereby the structural unemployment in the economy. Hence, the real business cycle theory says that the second economist is correct.

Economics Concept Introduction

Business cycle: The term business cycle refers to the repeated ups and downs in the level of economic activity that extend for several years.

Answer 6

Chapter 12, Problem 1SPA

(a)

To determine

Identify the business cycle theory that supports unemployment as a cause of less government spending.

(a)

Expert Solution

Explanation of Solution

The mainstream theory of business cycle supports the claim that insufficient government spending causes high unemployment in the economy. It is because this theory states that recession causes unemployment. The different forms of mainstream theory such as the Keynesian cycle theory and New Keynesian cycle theory explains that only government spending can eliminate the recessionary gap, thereby reduces the unemployment rate in an economy. Hence, the mainstream theory supports that the first economist is correct.

Economics Concept Introduction

Business cycle: The term business cycle refers to the repeated ups and downs in the level of economic activity that extend for several years.

Answer 7

Chapter 12, Problem 1SPA

(a)

To determine

Identify the business cycle theory that supports unemployment as a cause of less government spending.

Answer 8

(a)

Expert Solution

Explanation of Solution

The mainstream theory of business cycle supports the claim that insufficient government spending causes high unemployment in the economy. It is because this theory states that recession causes unemployment. The different forms of mainstream theory such as the Keynesian cycle theory and New Keynesian cycle theory explains that only government spending can eliminate the recessionary gap, thereby reduces the unemployment rate in an economy. Hence, the mainstream theory supports that the first economist is correct.

Answer 9

(a)

Expert Solution

Answer 10

(a)

Expert Solution

Answer 11

Expert Solution

Answer 12

Economics Concept Introduction

Business cycle: The term business cycle refers to the repeated ups and downs in the level of economic activity that extend for several years.

Answer 13

(b)

To determine

Identify the business cycle theory that supports unemployment as a cause of structural problem.

(b)

Expert Solution

Explanation of Solution

The real business cycle (RBC) theory supports the claim that structural problem causes high unemployment in an economy. This is because RBC states that ‘random fluctuations in the productivity’ is the main source of economic fluctuations. Therefore, the rate of technological change is the impulse that generates business cycle, thereby the structural unemployment in the economy. Hence, the real business cycle theory says that the second economist is correct.

Economics Concept Introduction

Business cycle: The term business cycle refers to the repeated ups and downs in the level of economic activity that extend for several years.

Answer 14

(b)

To determine

Identify the business cycle theory that supports unemployment as a cause of structural problem.

Answer 15

(b)

Expert Solution

Explanation of Solution

The real business cycle (RBC) theory supports the claim that structural problem causes high unemployment in an economy. This is because RBC states that ‘random fluctuations in the productivity’ is the main source of economic fluctuations. Therefore, the rate of technological change is the impulse that generates business cycle, thereby the structural unemployment in the economy. Hence, the real business cycle theory says that the second economist is correct.