Economics For Today
10th Edition
ISBN: 9781337613040
Author: Tucker
Publisher: Cengage Learning
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Chapter 18, Problem 1SQ
To determine
The theory that explained the automatic adjustment to achieve full employment.
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Students have asked these similar questions
In the Keynesian framework, for each of the following events which might cause a recession and/or inflation? Explain using Aggregate Demand/ Aggregate Supply.
a. A large increase in the price of the homes that people own
b. Rapid growth in the economy of a major trading partner
c. The development of a major new technology offers profitable opportunities for business
d. The interest rate rises
e. The good imported from a major trading partner becomes much less expensive. 
Changes in short-run aggregate supply can be caused by changes in:
Selected Answer:
C. government spending.
Answers:
A. the price level.
B. wealth.
C. government spending.
D. commodity prices.
A key insight in modern macroeconomics is to understand that:
a.
all the above are correct
b.
Government has a duty to stabilize an unstable economy
c.
prices are sticky in the short run
d.
there are many equilibrium possible in the economy
Chapter 18 Solutions
Economics For Today
Ch. 18.4 - Prob. 1YTECh. 18 - Prob. 1SQPCh. 18 - Prob. 2SQPCh. 18 - Prob. 3SQPCh. 18 - Prob. 4SQPCh. 18 - Prob. 5SQPCh. 18 - Prob. 6SQPCh. 18 - Prob. 7SQPCh. 18 - Prob. 8SQPCh. 18 - Prob. 9SQP
Ch. 18 - Prob. 1SQCh. 18 - Prob. 2SQCh. 18 - Prob. 3SQCh. 18 - Prob. 4SQCh. 18 - Prob. 5SQCh. 18 - Prob. 6SQCh. 18 - Prob. 7SQCh. 18 - Prob. 8SQCh. 18 - Prob. 9SQCh. 18 - Prob. 10SQCh. 18 - Prob. 11SQCh. 18 - Prob. 12SQCh. 18 - Prob. 13SQCh. 18 - Prob. 14SQCh. 18 - Prob. 15SQCh. 18 - Prob. 16SQCh. 18 - Prob. 17SQCh. 18 - Prob. 18SQCh. 18 - Prob. 19SQCh. 18 - Prob. 20SQ
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Similar questions
- Suppose an economy is experiencing recession. From the list below, select two (2) policy tools that the government can use to restore the economy back to a long-run macroeconomic equilibrium. Note: if you select more than two policy tools, 1 point will be taken for each additional choice. A. The government can decrease income taxes. B. The government can increase interest rates. C. The government can increase government spending. D. The government can send optimistic messages to boost expectations. E. The government can expand the resource base.arrow_forwardIn the Keynesian framework, which of the following events might cause a recession/inflation. Explain using the aggregate demand/aggregate supply. I only need the type of examples that go with the question though (Examples are crucial please!)  d. The interest rate rises e. The good imported from a major trading partner becomes much less expensive arrow_forwardIn the Keynesian framework, which of the following events might cause recession/inflation. Explain using the Aggregate Demand/Aggregate Supply with examples. (Examples are crucial please!) d. The interest rates rises e. The good imported from a major trading partner becomes much less expensivearrow_forward
- What are the important mechanisms that reverse the effects of a recession in a modern economy? (Check all that apply.) A. Labor supply increases due to an increase in real wages. B. The multipliers on wages and employment return to normal. C. Labor demand increases due to expansionary government policies. D. Labor demand increases due to market forces. What market forces might cause the labor demand curve to shift back to the right? (Check all that apply.) A. Technological advances encourage firms to expand their activities. B. The banking system recuperates and businesses are again able to use credit to finance their activities. C. Excess inventory has been sold off. D. Wage rigidity decreases.arrow_forwardMacroeconomics - Keynesian Matharrow_forwardWhich economic school relies most heavily on "sticky prices" to explain the effects of Aggregate Demand on GDP? A. Keynesian B. Monoetarist C. Rational Expectations D. Coordination Failurearrow_forward
- Which of the following is likely to occur if an increase in legal immigrants significantly reduces the wages of workers, ceteris paribus? A. Aggregate supply will decrease (shift left). B. Aggregate supply will increase (shift right). C. Aggregate demand will increase (shift right). D. Aggregate demand will decrease (shift left).arrow_forwardDefine what economists mean when they use the word: “recession”?arrow_forwardWhat effects would each of the following have on aggregate demand or each case use a diagram to show the expected effects on the equilibrium price level and level of real output. Assume that all other things remain constant. aggregate supply? In a. A widespread fear of depression on the part of consumers. AD curve (right, left), output (up, down) and price level (up, down) (assuming no ratchet effect). b. The expectation of rapid inflation. AD curve (right, left), output (up, down) and price level (up, down). с. A sizable increase in labor productivity (with no change in nominal wages). AS curve (right, left), output (up, down) and price level (up, down). d. Depreciation in the international value of the dollar. AD curve (right, left) (increased net exports); AS curve (right, left) (higher input prices)arrow_forward
- If the economy had been operating at a full- employment equilibrium, a. Describe the macroeconomic equilibrium after the rise in consumer spending. b. Explain and draw a graph to illustrate how the economy can adjust in the long run to restore a full-employment equilibrium. The magazine Women of China reported that Chinese women in big cities spent 63% of their income on consumer goods last year, up from a meager 26% in 2007. Clothing accounted for the biggest chunk of that spending, at nearly 30%, followed by digital products such as cell phones and cameras (11%) and travel (10%). Chinese consumption as a whole grew faster than the overall economy in the first half of the year and is expected to reach 42% of GDP by 2020, up from the current 36%.arrow_forwardSummarize the Neoclassical model: A. The neoclassical model is built on the importance of aggregate demand as a cause of business cycles and a degree of wage and price rigidity, and thus does a sound job of explaining many recessions and why cyclical unemployment rises and falls. B. The neoclassical model emphasizes aggregate supply by focusing on the underlying determinants of output and employment in markets, and thus tends to put more emphasis on economic growth and how labor markets work. C. The neoclassical model is built on the importance of aggregate supply as a cause of business cycles and a degree of wage and price rigidity, but does a poor job of explaining many recessions and why cyclical unemployment rises and falls.arrow_forwardAggregate Supply: Explain whether the economy is currently operating in the Keynesian, intermediate or neoclassical portion of the economy's aggregate curve. Also, point out a time when the economy may have been operating at another portion of the aggregate supply curve.arrow_forward
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