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Chapter 13: Q.10 (page 332)

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

Short Answer

Expert verified

Neoclassical economists tend to focus more on long term economic growth.

Step by step solution

01

Introduction of neo-classical economists.

The economy, according to neoclassical economists, self-adjusts. They will eradicate recession if they focus on long-term economic growth.

02

Explanation of solution.

They are more concerned with policies that promote economic growth than with fiscal or monetary policy. They are primarily concerned with lowering the natural rate of unemployment, which is a result of government activities.

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Most popular questions from this chapter

What shape is the long-nm aggregate supply curve? Why does it have this shape?
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?

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

If the economy is suffering through a rampant inflationary period, would a Keynesian economist advocate for stabilization policy that involves higher taxes and higher interest rates? Explain your answer.
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