Author Question: Which of the following does not impact aggregate demand in the Keynesian model? a. Changes in the ... (Read 178 times)

a0266361136

  • Hero Member
  • *****
  • Posts: 538
Which of the following does not impact aggregate demand in the Keynesian model?
 
  a. Changes in the supply of labor
  b. Net exports
  c. Household consumption
  d. Desired business investment demand
  e. Government purchases of goods and services

Question 2

Why is responding to a financial crisis by bailing out financial institutions more effective than direct support of nonfinancial businesses?
 
  What will be an ideal response?



lindahyatt42

  • Sr. Member
  • ****
  • Posts: 322
Answer to Question 1

A

Answer to Question 2

In the wake of a financial crisis, many businesses find it difficult to cover operating expenses and would welcome direct financial support. However, business subsidies or tax credits and measures to stimulate demand address only the symptoms of the economic downturn. Direct aid to businesses may allow them to survive, but does not bring the economy beyond the crisis. The underlying problem is the inability of financial institutions to identify productive opportunities worthy of financial support. The value of financial assets and, especially, the viability of surviving financial institutions must be clarified to bring the crisis to an end.



Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
 

Did you know?

People who have myopia, or nearsightedness, are not able to see objects at a distance but only up close. It occurs when the cornea is either curved too steeply, the eye is too long, or both. This condition is progressive and worsens with time. More than 100 million people in the United States are nearsighted, but only 20% of those are born with the condition. Diet, eye exercise, drug therapy, and corrective lenses can all help manage nearsightedness.

Did you know?

A seasonal flu vaccine is the best way to reduce the chances you will get seasonal influenza and spread it to others.

Did you know?

Intradermal injections are somewhat difficult to correctly administer because the skin layers are so thin that it is easy to accidentally punch through to the deeper subcutaneous layer.

Did you know?

Hip fractures are the most serious consequences of osteoporosis. The incidence of hip fractures increases with each decade among patients in their 60s to patients in their 90s for both women and men of all populations. Men and women older than 80 years of age show the highest incidence of hip fractures.

Did you know?

Many of the drugs used by neuroscientists are derived from toxic plants and venomous animals (such as snakes, spiders, snails, and puffer fish).

For a complete list of videos, visit our video library