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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

Economists from all theoretical persuasions

criticized the American Recovery and

Reinvestment Act. The “Stimulus Package”

was arguably a Keynesian measure so why would a Keynesian economist be critical of it? Why would neoclassical economists be

critical?

The legislation proposes that the government should use macroeconomic policy to achieve an unemployment rate of zero per cent, by increasing aggregate demand for as much and as long as necessary to accomplish this goal. From a neoclassical perspective, how will this policy affect output and the price level in the short run and in the long run? Sketch an aggregate demand/aggregate supply diagram to illustrate your answer.

If aggregate supply is vertical, what role does aggregate demand play in determining output? In determining the price level?

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

Do neoclassical economists tend to focus more on long term economic growth or on recessions? Explain briefly.
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