C ezto,mheducation.com/ Saved Competing Views in Macroeconomic Theory: Homework i The U.S. economy is in the midst of a recession. Several economists have been asked for policy recommendations. Evaluate each of their statements and determine which model of economics best applies to that statement. 1. John states that it will take time, but people will adapt and the economy will return to equilibrium. He argues that changes in the money supply can affect real GDP, the solution lies in monetary policy. (Click to select) v 2 points 2. Helena argues for government intervention to correct market failures that are preventing sticky wages and prices from returning to Skipped equilibrium. She acknowledges that the market will adjust, but it will take time. She believes monetary policy is the best option since fiscal policy lags make it ineffective. (Click to select) v 3. Mia states that markets are perfectly competitive and the economy has just experienced a shock. She expects markets to rapidly eBook return to a new competitive equilibrium. She recommends neither fiscal, nor monetary policies. (Click to select) v Ask 4. Jackson believes there is no end in sight for the recession. Sticky wages have caused unemployment to rise with no automatic recovery. Expansionary fiscal policy is needed to shift labor demand and aggregate demand back to equilibrium. (Click to select) v Print References