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

Question

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Answer 1

Question

Chapter 29, 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.

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Answer 2

Question

Chapter 29, 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.

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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 29, 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 29, 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 29, 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 29, 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 29, 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.