What are the simplifications used in this chapter to derive the aggregate expenditures model?
What will be an ideal response?
The assumptions used in this chapter to derive the aggregate expenditures model are based on the economic conditions of the Great Depression, and more specifically, on the inflexibility of prices. The chapter’s first stage is to assume a “closed” private economy with no international trade. The chapter then turns to an economy with international trade, or an “open” private economy. Finally, government is included in the final sections of the chapter. When government is included, then the economy will be a mixed economy with both public and private sectors and also will be an open economy.
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Indirect price discrimination differs from direct price discrimination because
a. In indirect price discrimination high value consumers can sometimes still get the low price b. In direct price discrimination firms do not have to worry about cannibalizing c. Direct price discrimination encourages rivals to enter but indirect discrimination does not d. There is no difference between the two
The initial Phillips curve relationship implied that the opportunity cost of _____ was higher _____
a. reducing unemployment; inflation b. increasing unemployment; inflation c. decreasing employment; interest rate d. increasing employment; deflation e. increasing employment; interest rate