09 Question (1 point) In this chapter you learned about one of the major debates in macroeconomics between classical and Keynesian economists—whether or not the macroeconomy has a natural adjustment mechanism that brings the economy back to long-run equilibrium. Which of the following would classical economists believe, and which of the following would Keynesian economists believe? Items (5 items) (Drag and drop into the appropriate area below) Cyclical unemployment is the norm. Supply is the key side of the market. The long run is the key time period. Prices are sticky. Savings is crucial to economic growth. Categories Classical economists Keynesian economists Drag and drop here Drag and drop here
Added by Mar-A A.
Close
Step 1
They believe that the long run is the key time period and that supply is the key side of the market. They also believe that savings is crucial to economic growth. Show more…
Show all steps
Your feedback will help us improve your experience
Luke Humphrey and 52 other Microeconomics educators are ready to help you.
Ask a new question
Labs
Want to see this concept in action?
Explore this concept interactively to see how it behaves as you change inputs.
Key Concepts
Recommended Videos
Jennifer S.
According to the Keynesian IS-LM model, what is the effect of each of the following on output, the real interest rate, employment, and the price level? Distinguish between the short run and the long run. a. Financial deregulation allows banks to pay a higher interest rate on checking accounts. b. A severe water shortage causes sharp declines in agricultural output and increases in food prices. c. A temporary beneficial supply shock affects most of the economy, but no individual firm is affected sufficiently to change its prices in the short run.
Classical economists belief that prices and quantities adjust to the changes in the forces of supply and demand and that the economy produces its potential output in the long run. On the contrary, Keynesian economists believe because of price and wage rigidities the economy's equilibrium output in the long run may be less than its potential output. What is price-wage rigidity? Do you agree with Keynes assessment that wage-price rigidity requires government's involvement in the markets? Why? Why not?
Akash M.
Recommended Textbooks
Principles of Economics
Principles of Microeconomics for AP® Courses
Economics
Watch the video solution with this free unlock.
EMAIL
PASSWORD
