Question
In a Neoclassical model when Aggregate Demand in increases, shifts outward through more Government spending... 1) Would you characterize the Neoclassical model being applicable in
In a Neoclassical model when Aggregate Demand in increases, shifts outward through more Government spending...
1) Would you characterize the Neoclassical model being applicable in an economy closer to Full-Employment GDP or farther from Full-Employment GDP? [Closer or Further?]
2) At a typical Neoclassical model equilibrium, for a change in Aggregate Demand, do prices or unemployment change relatively more? [Sentence(s) explaining why?]
3) Would you say there is a trade-off between inflation and unemployment in the Neoclassical model where equilibrium is below Full-Employment GDP? [Yes or No?]
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