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Chapter 26: Q.11RQ (page 642)

Do neoclassical economists tend to focus more on cyclical unemployment or on inflation? Explain briefly.

Short Answer

Expert verified

Neoclassical economists focus on inflation.

Step by step solution

01

Step1: Given Information

Cyclical unemployment - It is the overall unemployment that results literally from cycles of economic upturn and downturn.

Inflation-It is the rate of increase in prices of goods and services over a given period.

02

Step2: Explanation

Neoclassical economists focuses more on inflation is because any attempt to resolve cyclic unemployment may only create inflation and that can create noticeable damaging effects on nation.

03

Step3: Final Result

Neoclassical economists focus on inflation.

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Most popular questions from this chapter

Do neoclassical economists tend to focus more on cyclical unemployment or on inflation? Explain briefly.

Does neoclassical economics focus on the long term or the short term? Explain your answer.

Does neoclassical economics view prices and wages as sticky or flexible? Why?

When the economy is experiencing a recession,

why would a neoclassical economist be unlikely to argue for aggressive policy to stimulate aggregate demand and return the economy to full employment? Explain your answer.

Use Table 26.3 to answer the following questions.

a. Sketch an aggregate supply and aggregate demand diagram.

b. What is the equilibrium output and price level?

c. If aggregate demand shifts right, what is equilibrium output?

d. If aggregate demand shifts left, what is equilibrium output?

e. In this scenario, would you suggest using aggregate demand to alter the level of output or to control any inflationary increases in the price level?
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