Which of the following statements about modern macroeconomic theory is most accurate?
a. Keynes' ideas help us understand movements in output around its long-run trend, while the Classical model is more useful in explaining the long-run trend itself.
b. The classical model helps us understand movements in output around its long-run trend, while the short-run macro model is more useful in explaining the long-run trend itself.
c. Both classical and short-run macro models help us understand movements in output around its long-run trend, but neither model is effective at explaining the long-run trend itself.
d. Neither the classical nor the short-run macro model helps us understand movements in output around its long-run trend, but both are useful in explaining the long-run trend itself.
e. Only the short-run macro model is useful in understanding movements in output around its long-run trend, and in explaining the long-run trend itself.
A
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The size of the underground economy would tend to increase if the government of a country
A) increased income tax rates. B) decreased government regulations on businesses. C) legalized prostitution. D) legalized marijuana.
After graduation, you start an internet-based firm that allows people to buy and sell books online. Based on your market research, you believe there are two basic types of customers
The first type is the casual reader who has relatively low willingness-to-pay for your services, and their annual demand is Q1 = 30 - 40P where Q1 is the number of books traded per year and P is the price you charge per book traded. The second type of customer is the avid reader who has relatively high willingness-to-pay for your services, and their demand is Q2 = 100 - 50P. The marginal cost of your online service is $0.40 per book traded. a. If you set your usage fee equal to the marginal cost, how many books will each type of customer trade on your system? What is the consumer surplus enjoyed by each type of customer? b. What is the optimal entry fee that you should charge under a two-part tariff pricing scheme for access to your online market? How much consumer surplus is left for the two types of customers after they pay the entry fee and usage fee?
An increase in the minimum wage will likely:
What will be an ideal response?
In the market for euros, an increase in U.S. real interest rates tends to
A. cause no change in equilibrium price. B. increase equilibrium price. C. decrease equilibrium price. D. increase excess demand.