Describe the policy change that a classical macroeconomists, a Keynesian, and a monetarist would recommend for...

Describe the policy change that a classical macroeconomists, a Keynesian, and a monetarist would recommend for policymakers in a European country to adopt in response to each of the following events:

1-Inflation is rising quickly.

2-Growth in the world economy accelerates.

3-The world price of oil falls.

Expert Solution

In this question, there is the policy change according to a different category of the economic thought that is under a classical macroeconomist, Keynesian and monetarist recommendations for policymakers in a European country to adopt in response to each of the following events.

1- inflation is rising quickly.

If the inflationary situation is rising quickly in the economy then under a classical microeconomist it would control the strategic long-run economic policies to control the inflationary situation by observing the factors to make the economic policies according to the situation.

A Keynesian economist believes in the control of aggregate demand and aggregate supply if the inflation is rising quickly in the economy.

Monetarist economists work on the policy-making of inflation where they can control the money supply in the matter of the control of the inflationary and deflationary situation in the economy.

2- growth in the world economy accelerates.

. in this case, a macroeconomist work on the concept of gross domestic product which controls the efficiency and effectiveness in the economy the Keynesian economics work on the concept of the control of aggregate demand and aggregate supply in the inflationary and deflationary situation in the economy and it is related to the growth of world economy with the context of domestic economy and a monetarist means who can control the total money supply and enhance the money supply in the world economy.

3. The world price of oil falls in this concept macroeconomists work on the analysis of rising and fall of the GDP. The Keynesian economist controls the overall demand and overall supply in the economy and the Monitor test can control by reducing the prices up to the optimum level.

Rahul Sunny answered 2 years ago

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