Explain the difference between a recessionary gap and the inflationary gap. Discuss how a "conservative" and a "liberal" might differ in the types of policies they advocate to counteract a recessionary gap. Explain how, under certain conditions, monetary policy can remove an...
Explain the concept of frictional unemployment and why it is important to macroeconomics. Explain whether classical economics or Keynesian economics grew in importance during inflation. Why is unemployment an economic problem? What are the consequences of a negative GDP gap? Explain how do minimum wage...
Inflationary gap An inflationary gap occurs whenever huge excess demand occurs due to high employment and even huge trade activities for which actual GDP becomes more than the potential GDP. Answer and Explanation:1 The federal funds rate is often increased...
Explain the concept of devaluation, and explain the effect devaluation has on the price of a country's imports. Why will an anticipated increase in the money supply not cause real GDP to increase? Explain in detail. Suppose the Feder...
The media seems to really struggle with the concept of monetary superneutrality. Since the 1970s, economists have understood that there is no long run trade-off between inflation and unemployment, but people persist is believing that if we could just raise inflation from 1.5% to 2% then lots ...
Explain how fiscal policy can be used to close the (a) recessionary gap and (b) inflationary gap. Differentiate between expansionary and contractionary fiscal policy and the effect of each on the economy and Federal budget. What are a fiscal deficit and a monetary polic...
Explain the concept of GDP. Define and explain the significance of GDP, real GDP, and real per capita GDP. What does GDP mean and how does it affect the economy? Is it good to have a high GDP? Explain with help of an equation that growth rate...
What would be the interpretation of how an expansionary monetary policy would address this problem? What is stagflation and how did it challenge Keynesian orthodoxy? Explain and diagrammatically represent how a self-regulating economy removes itself from an inflation...
1. Assume that the government's economic outlook is shaped by Keynesian economic philosophy and policies with regard to an inflationary gap. i) Explain and use the AD/AS model to show what happens if What are the basic tenets/beliefs/points of Keynesian economics? How do they differ...
What is an expansionary gap? What fiscal policy might close that gap? Explain using a graph. In the context of macroeconomics, explain the concept of expansionary policy. What is the importance of having a strong aggregate demand in United States economy? What are ...