Exam 15: Macroeconomic Viewpoints: New Keynesian, Monetarist, and New Classical

A by-product of the acceptance of the Keynesian school was the wide approval and practice of activist government fiscal policy around the world.

"The market is not a self-regulating mechanism because prices are not flexible and nothing ensures that planned leakages will be offset by planned injections. To bring the economy out of depression and end high unemployment, some way of stimulating aggregate demand is required. This can be best achieved by a combination of government deficit spending and regulation of tax rates." Which school of thought does this statement best represent?

The _____ aggregate supply curve assumed by classical economists means that the equilibrium level of _____ is determined only by the aggregate supply curve.

The new Keynesian economists believed that:

Monetarists think that the government:

Which of the following is true of Simple Keynesian model?

Which of the following schools of thought believes that wages and prices are rigid in the short run?

Which of the following promoted legislation that would give private citizens greater information regarding public policymaking?

Which of the following schools of thought criticized the Fed's policy of targeting interest rates?

According to new Keynesian economics:

_____ have faith in the free market (price) system that leads them to favor minimal government intervention.

Monetarists argue that the long-run Phillips curve is negatively sloped.

New classical economists believe that:

Which of the following schools of thought believes that the major source of the macroeconomic problems are the disequilibria in the private labor and goods market?

According to the new Keynesian school of thought, fiscal policy is a completely ineffective tool in combating supply-side shocks.

Which of the following schools of thought stressed on a fixed-price model for macroeconomic equilibrium?

The figure given below represents the new classical long run and short run Phillips curve measuring inflation rate on vertical axis and unemployment rate on horizontal axis.?Figure 15.2 -Refer to Figure 15.2. Assume that the government adopted an unexpected expansionary monetary policy that has the economy currently at point D. If people expect that this inflation rate will persist next year, the economy will now:

An economist from which school of thought would most likely accept the following- "The wide acceptance and practice of activist government fiscal policy."

Which of the following would explain wage rigidities?

According to the monetarists, government intervention can stabilize the economy and minimize the effect of business cycles.