Question

QUESTION 50

1. Government policy designed to stimulate the economy (move it back to long run equilibrium) is called

   	a.	bogo policy
   	b.	expansionary policy
   	c.	recessionary policy
   	d.	contractionary policy

1 points   

QUESTION 51

1. Two Part Question

   1. What is a recessionary gap? (Be sure to include in your answer a discussion of actual and potential GDP)

   2. What is an inflationary gap?  (Be sure to include in your answer a discussion of actual and potential GDP)

10 points   

QUESTION 52

1. What is the difference between a short run aggregate supply curve and a long run aggregate supply curve. (Discuss the shape, the effect of the price level (on one the price level has no effect), unemployment, etc)

10 points   

QUESTION 53

1. What do the Keynesians mean when they talk about sticky wages and sticky prices

10 points   

QUESTION 54

1. According to neoclassical economists, which is more important the short run or the long run and why

10 points   

QUESTION 55

1. A neoclassical economist and a Keynesian economist are studying the economy of Blueland. It appears that Blueland is beginning to experience a mild recession with a decrease in aggregate demand. Which of these two economists would likely advocate that the government of Blueland take active measures to reverse this decline in aggregate demand? Why?

Answer 1

50 - Option B

Expansionary policy

This is the policy which the government implements to recover the economy . This is called the fiscal expansionary policy

51 A - Recessionary gap is the defficiency gap in which the actual or the real GDP is less than the potential GDP. In this the real AD is less than AD required to establish the full employment equilibrium.

B - The inflationary gap is the gap where the real GDP is more than the level of potential GDP. The level of AD is more than the AD required to establish the full employment equilibrium.