According to the New Classical theory, why may output differ from its full-employment level in the short run?
What will be an ideal response?
When the actual price level is greater than the expected price level, firms increase output. When the actual price level is less than the expected price level, firms decrease output. As a result, output can be higher or lower than the full employment level in the short run—until firms can distinguish changes in relative prices from changes in the general price level. than the expected price level, firms increase output.
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Refer to the above table. You are given information on Jasmin's consumption for 2005 and 2015. Using 2005 as the base year, compute the price index for 2015. The index equals
A) 1.5. B) 70.588. C) 141.667. D) 107.143.
For much of the 1940s, 50s and 60s, macroeconomic policymaking in the U.S. and abroad was dominated by:
a. the ideas advanced in Keynes's General Theory. b. the ideas advanced in Friedman's Monetary History of the U.S. c. the supply-side theories of Arthur Laffer and David Stockman. d. Robert Lucas's theories of business cycles.