What two solutions did Keynes suggest as appropriate government policies in order to close a recessionary gap? Does the assumption of stuck prices hold true when the economy moves close to its potential output? Explain.
What will be an ideal response?
According to Keynes, the government could close a recessionary gap by increasing government spending or lowering taxes. The assumption of stuck prices becomes, however, hard to hold as the economy moves closer to it potential output because there is not an oversupply of productive resources available. In reality, prices will tend to increase with demand as the economy gets closer to its potential production capacity.
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The per-worker production function relates output per worker
A) to capital per worker. B) to the participation rate. C) to production per worker. D) in different countries.
Monetarists believe in all of the following except
a. steady growth in inflation will yield stable output. b. steady growth in the money supply will yield stable output. c. fluctuations in the money supply are responsible for business cycles. d. the Fed should not be involved in trying to stabilize the economy.
All checking accounts are transactions accounts.
Answer the following statement true (T) or false (F)
Which segment of the World Bank funds the world's poorest countries—those unable to repay its standard loans—such as India, Pakistan, Bangladesh, Nigeria, and Ethiopia?
a. the International Finance Corporation b. the International Bank for Reconstruction and Development c. the International Development Association d. the Multilateral Investment Guarantee Agency