Chapter Questions
Classicals saw the depression as a political problem, not an economic problem. Why?
Did Keynesian or Classical economics support laissez-faire policy?
Would Keynesian or Classical economists be more likely to emphasize the fallacy of composition?
As the problem of inflation grew in the $1970 \mathrm{~s}$, did Keynesian or Classical economics grow in importance?
Is structural stagnation a Keynesian or a Classical theory?
In what way is potential output not purely a physical measure based on the number of workers and existing factories?
What are two ways in which long-term economic growth is measured? $(L O 24-2)$
What has happened to growth rates in Western Europe and the United States in recent years?
How does the U.S. per capita growth rate since 1940 compare to growth rates in other areas around the world?
Draw a representative business cycle, and label each of the four phases.
How does a structural stagnation differ from a recession?
Which has the more pessimistic view of the problems facing the United States economy: structural stagnation theory or conventional business-cycle theory?
Distinguish between structural unemployment and cyclical unemployment.
What type of unemployment is best studied within the long-run framework?
What type of unemployment is best studied under the short-run framework?
Suppose the total labor force is 155 million of a possible 244 million working-age adults. The total number of unemployed is 13 million. What is the standard unemployment rate?
Does the standard unemployment rate underestimate or overestimate the unemployment problem? Explain. $(L O 24-4)$