Numerade

Questions asked

ANSWERED

Nick Johnson

Numerade educator

Whenever an economy is in a liquidity trap Inflation is very low, turning to deflation Conventional monetary policy can be used to boost economic growth Unconventional monetary policy can be used to spur growth Deflation is certain Conventional fiscal policy becomes powerless

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ANSWERED

Nick Johnson

Numerade educator

Which of the following is incorrect regarding the beliefs of Keynesians and heterodox economists? an increase in government investment that complements private sector investment, can decrease returns in the private sector an increase in government investment that complements private sector investment, can increase returns in the private sector They note that increased government expenditure has a multiplier effect on the economy They believe ‘Crowding in’ is likely to operate rather than crowding out in developing countries higher government expenditure could stimulate the economy and improve the economic outlook, which leads to investment expenditure by firms being stimulated

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ANSWERED

Nick Johnson

Numerade educator

Which of the following is incorrect regarding IS curve? When the IS curve is completely interest rate elastic the monetary policy is more effective in increasing output When the IS curve is interest rate inelastic the monetary policy is more effective in increasing output The IS curve is steeper when investment is interest rate inelastic When the IS curve is interest rate inelastic the effective policy is more effective in increasing output The IS curve is flatter when investment is interest rate elastic

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ANSWERED

Nick Johnson

Numerade educator

Which of the following statements are incorrect regarding why Fiscal activism became unpopular? Monetarists argued that a contractionary fiscal policy only crowds out the private sector in the long run Robert Lucas argued that the private sector will anticipate any systematic policies and neutralize their effects The emergence of stagflation The implementation lags associated with fiscal policy The argument that government implementation of fiscal policy was not consistent

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INSTANT ANSWER

Monetary policy will be more effective in influencing aggregate demand and therefore the level of output and employment the IS curve is steeper the LM curve is flatter the LM curve is steeper In the case of a liquidity trap In the case of an interest rate inelastic IS curve

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ANSWERED

Nick Johnson

Numerade educator

Which of the following statements is INCORRECT with regards to nominal wage rigidity? Select one: Involuntary unemployment is a result of nominal wage rigidity. A fall in the real wage will induce firms to demand more labour. A negative demand shock with nominal wage rigidity results in involuntary unemployment. According to Keynes the nominal wage is considered to suffer from downward rigidity. A positive demand shock with nominal wage rigidity causes involuntary unemployment

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Bryan Kim

Numerade educator

Consider a closed economy goods market where; Choose the CORRECT statement. C + I + G → Υ C(Υ) + I(r) + G → Υ Select one: government expenditure is exogenously determined. a decrease in the net exports will decrease the level of output and employment. a decrease in the interest rate will not affect the level of investment expenditure. an increase in imports will increase the overall level of output in the economy. consumption is only determined by the level of income.

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Dave Kratz

Numerade educator

The Classical school of thought was built around the assumption(s) that; EXCEPT all agents have stable expectations. Government intervention is necessary. the market clears as price acts as a signal. wages and prices are fully flexible. firms are perfectly competitive.

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ANSWERED

Andrew Davis

Numerade educator

In the old classical school, there is no demand deficiency because, aggregate expenditure is less than the level of income in the economy. The level of consumption reduction is compensated by the increase in the level of investment by the same proportion. Therefore, when consumption falls, the production of capital goods increases. Thereby, ensuring that aggregate expenditure always equals the level of income The level of consumption increase is compensated by the increase in the level of investment by the same proportion. Therefore, when consumption falls, the production of capital goods increases. Thereby, ensuring that aggregate expenditure always equals the level of income. The level of consumption reduction is compensated by the fall in the level of investment by the same proportion. Therefore, when consumption falls, the production of capital goods increases. Thereby, ensuring that aggregate expenditure always equals the level of income aggregate expenditure overshoots the level of income.

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ANSWERED

Nick Johnson

Numerade educator

The Classical, as a school of thought, started with the book _____ written by _______ Wealth of nations; John Maynard Keynes. Wealth of Nations; Adam Smith General theory of employment, interest and money; Adam Smith Capitalism and freedom; Milton Friedman General theory of employment, interest and money; John Maynard Keynes.

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Seitlheko N.