hoo Keynesian macroeconomic theory departed from classical views because Keynes

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Keynesian macroeconomic theory departed from classical views because

Keynes did not think that scarcity existed in the aggregate economy

Keynes believed that capitalism, in general, is not a workable economic system but classical economists believed it was systemically viable

Keynes believed uncertainty reduced the ability to make rational decisions and classical economists believed economic agents have very good information and act rationally

Keynes disagreed with classical economists about the ability of prices to allocate resources in the long run

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Keynesian monetary theory differs from classical theory because

Classical economists thought the velocity of money is fixed and Keynes believed it varies

Keynes disagreed with the classical view that hoarding money is an economic concern

Keynes disagreed with the classical view that a central bank is needed to control the money supply

Keynes did not think that the equation of exchange (MV=PY) represented the correct relationship between nominal GDP and money in circulation

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Keynesians hold the __________ as cause of business cycles and Monetarists hold the ___________.

consumption hypothesis, scarcity hypothesis

spending hypothesis, money hypothesis

scarcity hypothesis, consumption hypothesis

money hypothesis, consumption hypothesis

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Keynesian consumption theory

proposes that a rule of thumb guides consumption decisions

is not significantly different from classical consumption theory

only applies if all economic agents have perfect information

generalizes utility maximizing behavior to the aggregate economy

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Keynesian aggregate supply theory

is an unnecessary supplement to Keynesian aggregate demand theory

assumes that labor markets fully adjust to economic shocks with changes in money wages

produces a vertical aggregate supply function in the price-quantity plane

is based on a contractural and relative wage theory of labor markets

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Keynes did not think that scarcity existed in the aggregate economy

Keynes believed that capitalism, in general, is not a workable economic system but classical economists believed it was systemically viable

Keynes believed uncertainty reduced the ability to make rational decisions and classical economists believed economic agents have very good information and act rationally

Keynes disagreed with classical economists about the ability of prices to allocate resources in the long run

Keynesian macroeconomic theory departed from classical views because Keynes did not think that scarcity existed in the aggregate economy Keynes believed that capitalism, in general, is not a workable economic system but classical economists believed it was systemically viable Keynes believed uncertainty reduced the ability to make rational decisions and classical economists believed economic agents have very good information and act rationally Keynes disagreed with classical economists about the ability of prices to allocate resources in the long run Keynesian monetary theory differs from classical theory because Classical economists thought the velocity of money is fixed and Keynes believed it varies Keynes disagreed with the classical view that hoarding money is an economic concern Keynes disagreed with the classical view that a central bank is needed to control the money supply Keynes did not think that the equation of exchange (MV=PY) represented the correct relationship between nominal GDP and money in circulation Keynesians hold the as cause of business cycles and Monetarists hold the consumption hypothesis, scarcity hypothesis spending hypothesis, money hypothesis scarcity hypothesis, consumption hypothesis money hypothesis, consumption hypothesis Keynesian consumption theory proposes that a rule of thumb guides consumption decisions is not significantly different from classical consumption theory only applies if all economic agents have perfect information generalizes utility maximizing behavior to the aggregate economy Keynesian aggregate supply theory is an unnecessary supplement to Keynesian aggregate demand theory assumes that labor markets fully adjust to economic shocks with changes in money wages produces a vertical aggregate supply function in the price-quantity plane is based on a contractural and relative wage theory of labor markets

Explanation / Answer

1

Keynes believed uncertainty reduced the ability to make rational decisions and classical economists believed economic agents have very good information and act rationally

2

Keynes did not think that the equation of exchange (MV=PY) represented the correct relationship between nominal GDP and money in circulation

scarcity hypothesis, consumption hypothesis

proposes that a rule of thumb guides consumption decisions

assumes that labor markets fully adjust to economic shocks with changes in money wages

Keynes believed uncertainty reduced the ability to make rational decisions and classical economists believed economic agents have very good information and act rationally

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