Fill in the following table: Neoclassical Economics Keynesian Economics Focus on

Question

Fill in the following table:

Neoclassical Economics

Keynesian Economics

Focus on long or short term

Prices and wages: sticky or flexible

Economic output: primarily determined by aggregate demand or aggregate supply

Aggregate supply vertical or upward sloping

Phillips Curve vertical or downward sloping

Is aggregate demand a useful tool for controlling inflation

What should be the primary area of policy emphasis for reducing unemployment

Is aggregate demand a useful tool for ending recession

Neoclassical Economics

Keynesian Economics

Focus on long or short term

Prices and wages: sticky or flexible

Economic output: primarily determined by aggregate demand or aggregate supply

Aggregate supply vertical or upward sloping

Phillips Curve vertical or downward sloping

Is aggregate demand a useful tool for controlling inflation

What should be the primary area of policy emphasis for reducing unemployment

Is aggregate demand a useful tool for ending recession

Explanation / Answer

neo classical Keynesian Focus on long or short term LOng term Short term Prices and wages: sticky or flexible Flexible Sticky Economic output: primarily determined by aggregate demand or aggregate supply Aggregate supply Aggregate Demand Aggregate supply vertical or upward sloping Vertical Upward sloping Phillips Curve vertical or downward sloping Vertical Downward sloping Is aggregate demand a useful tool for controlling inflation Yes Yes What should be the primary area of policy emphasis for reducing unemployment Reformations of labor market intitutions to reduce natural rate of unemployment. Aggregate demand shoukd be increased to eliminate cyclical unemployment Is aggregate demand a useful tool for ending recession In temorary sense it is can be used in shortrun, but may can give rise to inflation instead Yes.

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