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- The concept that market forces in the macroeconomy can remedy a recession is referred to as: Keynesianism: the use of expansive fiscal and monetary policies to resolve a recession. The self-correcting mechanism The consumption function The paradox of thrift3. What do you think about the interest rate i for an economy, which suffers a long period of pandemic and economic recession? Framework". Please analyze this issue with "Liquidity PreferenceHow effective is the Yield Curve as a tool for assessing the coming of a recession?
- Often, more than one kind of shock hits the economy at once. When this happens, the different shocks could push the price level in different directions in the short run, leaving the final short-term result ambiguous. What is most likely to happen the price level and real GDP (i.e., output) in the following cases? Will they rise, or fall, or can’t you tell with information given? Note that you will not always be able to know the answer for one, but not the other. Motivate your answer. A nation’s scientists invent many new internet search tools, raising current productivity and making investors optimistic about future inventions as well. A government raises taxes, and its economy experiences a year of excellent weather for growing crops. Oil prices skyrocket and the central banks slows the rate of money growth.Short run vs. Long Run a.Why on the long run, fiscal and monetary policies are not effective?We know that the market should respond positively to good news and that good-news events such as the coming end of a recession can be predicted with at least some accuracy. Why, then, can we not predict that the market will go up as the economy recovers?
- Suppose you believe that the economy is just entering a recession. Your firm must raisecapital immediately, and debt will be used. Should you borrow on a long-term or a shorttermbasis? Why?3. Consider the monetary neutrality. Suppose that the central bank changed the money supply. According to economists’ assumption on monetary neutrality, could the change affect the employment in the short-run? How about in the long-run? Short-run: Long-run:One of the following is the drawback of local borrowing. Select one: a. None the options are correct b. Triggers inflation c. Raises unemployment d. Sluggish economic growth
- When one currency declines against the dollar, it may correspond to lower inflation in the foreign country and as a result, historical operating income and ROI's will be higher. True or False ?Which of the following is not a factor that can provide financial instability? a. Decreases in interest rate b. Increase in uncertainty c. Negative shocks to firms’ balance sheets d. A deterioration in FI’s balance sheetsThere are claims that the central bank caused the recession, and due to them, production has dropped below the optimum level, and inflation has gone up. What would you say to defend the central bank? Explain in detail.