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Author Question: Describe and explain the policy irrelevance proposition. What will be an ideal ... (Read 83 times)

swpotter12

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on: Jun 30, 2018
Describe and explain the policy irrelevance proposition.
 
  What will be an ideal response?

Question 2

Name two policies that a Keynesian economist would advocate to influence the level of GDP in the short run.
 
  What will be an ideal response?


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jonathanballen97

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Reply #1 on: Jun 30, 2018
Answer to Question 1

The policy irrelevance proposition is the conclusion that policy actions have no real effects in the short run if the policy actions were anticipated and none in the long run even if the policy actions were unanticipated. The conclusion comes from rational expectations hypothesis. Prices and wages are assumed to be flexible and people form their expectations on a rational basis.

Answer to Question 2

changes in taxes and spending


swpotter12

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Reply 2 on: Jun 30, 2018
Great answer, keep it coming :)

tranoy

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Reply 3 on: Yesterday
Excellent

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