Macroeconomics
13th Edition
ISBN: 9781337617390
Author: Roger A. Arnold
Publisher: Cengage Learning
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Chapter 16, Problem 5QP
To determine
Comparison between classical theory and new classical theory.
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The Great Depression undermined the credibility of the classical view. Correspondingly, the high rates of inflation and unemployment during the 1970s undermined the Keynesian view. Can you explain why both of these phenomena occurred?
Explain why classical assumptions are not realistic?
John Maynard Keynes spearheaded a new school of macroeconomic theory during the Great Depression. Which of the following represents a Keynesian point of view of macroeconomics?
Chapter 16 Solutions
Macroeconomics
Ch. 16.2 - Prob. 1STCh. 16.2 - Prob. 2STCh. 16.2 - Prob. 3STCh. 16.3 - Prob. 1STCh. 16.3 - Prob. 2STCh. 16.3 - Prob. 3STCh. 16.5 - Prob. 1STCh. 16.5 - Prob. 2STCh. 16 - Prob. 1QPCh. 16 - Prob. 2QP
Ch. 16 - Prob. 3QPCh. 16 - Prob. 4QPCh. 16 - Prob. 5QPCh. 16 - Prob. 6QPCh. 16 - Prob. 7QPCh. 16 - Prob. 8QPCh. 16 - Prob. 9QPCh. 16 - Prob. 10QPCh. 16 - Prob. 11QPCh. 16 - Prob. 12QPCh. 16 - Prob. 13QPCh. 16 - Prob. 14QPCh. 16 - Prob. 15QPCh. 16 - Prob. 1WNGCh. 16 - Prob. 2WNGCh. 16 - Prob. 3WNGCh. 16 - Prob. 4WNGCh. 16 - Prob. 5WNG
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- According to the classical perspective (the one from the 19th century that I described at the beginning of my first lecture video), what kinds of things could cause recessions or other economic downturns?arrow_forwardExplain what are the differences between classical economist and Keynesian economist point of view?arrow_forwardIn the Keynesian model (that is, the short run), what causes recessions?arrow_forward
- What is the Neoclassical Economics view of labor markets. How do they function? Does the economy produce full employment? How? If not, why?arrow_forwardHow were the Keynesian, Monetarist and New Classical theories of the economy synthesized to develop the New Keynesian Economics?arrow_forwardTask of the modern economics: What is the difference between Keynesian theory of economics and the Classical Theory of economics?arrow_forward
- What, using examples, are the main contrasts between the Keynesian and Neoclassical approaches?arrow_forwardTrue or false question: Although there is no specific founder of macroeconomics, John Maynard Keynes is usually cited as such.arrow_forwardBriefly explain how one or more of the microeconomic components, namely consumption,investment, supply and demand for money influence macroeconomic outcomes and formulations of the following macroeconomic theories:a. Solow Growth Model b. The Mundell-Fleming model c. Neoclassical Model of Investment Use mathematical equations and graphs where necessary.arrow_forward
- Which of the following statements is inconsistent with Classical Theory? A.The economy will eventually produce at the full-employment level of output. B.The economy is self-regulating. C.The economy has an environment of “invisible hand”. D.The economy has inflexible wages and prices.arrow_forwardThink back to August 6, 1945. The United States has just dropped an atomic weapon on the city of Hiroshima killing tens of thousands of Japanese and devastating the infrastructure. A Keynesian at that time might conclude that there is a silver lining in the destruction, as economic prosperity will result. Evaluate the logic of this claim in a few sentences.arrow_forwardAccording to the neoclassical theory of distribution, a worker's real wage reflects her productivity. Let's use this insight to examine the incomes of two groups of workers: farmers and barbers. Let W, and W, be the nominal wages of farmers and barbers, P, and P, be the prices of food and haircuts, and MPL, and MPL, be the marginal productivity of farmers and barbers. a. Over the past century, the productivity of farmers (MPL) has risen substantially due to technological progress. According to the neoclassical theory, farmers' real wage (W/P) should have remained constant. increased. decreased. b. Over the past century, the productivity of barbers (MPL) has remained constant. According to the neoclassical theory, barbers' real wage (W/Pb) should have decreased. increased. Incorrect c. In parts a and b, real wages are measured as units of output per hour worked. the ratio of capital to labor. fluctuated randomly. Incorrect remained constant. fluctuated randomly. output per worker times…arrow_forward
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