Macroeconomics
10th Edition
ISBN: 9780134896441
Author: ABEL, Andrew B., BERNANKE, Ben, CROUSHORE, Dean Darrell
Publisher: PEARSON
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Chapter 1, Problem 5AP
To determine
To comment: on the ideologies of the Classical and Keynesian schools of thought in relation to the government of the United States imposing tariffs on imported steel with the intention to protect local steel producers.
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Recent data from the Bureau of Labor Statistics show that the average price level for consumers rose 5.4% over the past year. While some are expressing concern over rising inflation leading the economy to “overheat,” there is some evidence indicating that this is due to the reopening of the economy as producers adjust to rising demand for goods and services. Many of the goods with the largest price increases, like bacon or cars and trucks, cannot have their production ramped up as quickly as demand is increasing. Other industries are facing supply chain challenges, like shortages of truck drivers. These problems are most likely to be short term, so, as supply catches up with demand, we can expect to see prices return to normal.
As evidence, after spiking to record highs in early summer, lumber prices have now fallen below their price at the start of the year. The reason for the dramatic price increase earlier in the year was a combination of reduced supply in 2019 and a surge in demand…
Suppose that the government believes the economy is not producing goods and services at its optimal level. In an attempt to stimulate the economy, the government increases the quantity of money in the economy by printing more money.
This monetary policy the economy's demand for goods and services, leading to product prices. In the short run, the change in prices induces firms to produce goods and services. This, in turn, leads to a level of unemployment.
In other words, the economy faces a trade-off between inflation and unemployment: Higher inflation leads to unemployment.
The basic difference between macroeconomics and microeconomics is:
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answer choices
microeconomics explores the causes of inflation while macroeconomics focuses on the causes of unemployment
microeconomics concentrates on the behaviour of individual consumers and firms while macroeconomics focuses on the performance of the entire economy
microeconomics concentrates on the behaviour of individual consumers while macroeconomics focuses on the behaviour of firms
microeconomics concentrates on individual markets while macroeconomics focuses primarily on international trade
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