EBK MICROECONOMICS
21st Edition
ISBN: 8220103960151
Author: McConnell
Publisher: YUZU
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Chapter 19, Problem 1P
To determine
Second, Third and Fourth generation population.
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Use the Feynman technique throughout. Assume that you’re explaining the answer to someone who doesn’t know the topic at all:
5. What is “Say’s Law” and how is it different from “Keynes’ Law”? How are these “laws”directly seen in the respective AD/AS models? Why is there such a huge disagreement aboutwhich “law” is correct?
8. Read these recent quotes (taken from blogs) below and determine whether the sentiment inthe quote is Keynesian or Classical. Just write “Keynesian” or “Classical” in the space rightafter the Ph.D. economist’s name:
a) “Market economies are not self-stabilizing and they do not quickly adjust to findthe socially optimal employment rate in the absence of active stabilizationpolicies.” – Economist Roger Farmer
b) “The paradox of thrift purportedly shows that saving is bad and results in poverty.Well, it (saving) isn't that bad, because here we have the recognition that addedsaving results in lower interest rates and more investment.” – Economist BillWoolsey
c) “In much of the world, there is insufficient demand to fully employ the valuableservices of available humans and machines. This characterization of the globaleconomy has been true for the past seven years. It seems likely to be true for yearsto come.” – Economist Nararyana Kocherlakota
d) “The economic cost of unemployment…
Use the Feynman technique throughout. Assume that you’reexplaining the answer to someone who doesn’t know the topic at all:
1. Explaina) what the marginal propensity to consume is;
b) the marginal propensity to consume’s association with a Keynesian expendituremultiplier;
c) the mechanism or process by which the expenditure multiplier “works” in the KeynesianModel.
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