Classical Theory: The Classic model is based on three (3) key assumptions: rationality, no money illusion...

Classical Theory: The Classic model is based on three (3) key assumptions: rationality, no money illusion and perfect competition. Using an example, explain why you agree or disagree with the assumptions of no money illusion and rationality.

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Rahul Sunny answered 1 year ago

List the three assumptions of the classical model, and illustrate how a negative shock to AD...

List the three assumptions of the classical model, and illustrate how a negative shock to AD would affect the labor market and the market for goods and services. Then show how a sudden desire on the part of households to save more would affect the market for loanable funds , as well as total demand for goods and services in the classical system. In both parts, explain clearly and label all graphs completely.

Consider the classical IS-LM/AS-AD model under the assumptions of the misperceptions theory. A) Which graph represent...

Consider the classical IS-LM/AS-AD model under the assumptions of the misperceptions theory. A) Which graph represent the classical AS-AD model under the assumptions of the misperceptions theory? Which curve represents the SRAS curve? What about the LRAS and AD curves? B) Assume the economy is starting in general equilibrium. Using the classical AS-AD model with misperceptions, describe what will happen in the short-run and the long-run to output, the price level, and the expected price level, and when there is...

Discuss the main assumptions of a classical linear regression model.

what are the assumptions made about the economy in the classical model?

3. The classical dichotomy and the neutrality of money The classical dichotomy is the separation of...

3. The classical dichotomy and the neutrality of money The classical dichotomy is the separation of real and nominal variables. The following questions test your understanding of this distinction. Amy spends all of her money on paperback novels and mandarins. In 2015, she earned $18.00 per hour, the price of a paperback novel was $9.00, and the price of a mandarin was $1.00. Which of the following give the nominal value of a variable? Check all that apply. Amy's wage...

In words explain Classical Dichotomy, Money Neutrality, and the Classical theory (short and long run).

Compare and contrast the classical and the Cambridge versions of the quantity theory of money.

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Q: Discuss the key idea of “Classical Dynamics of Smith and Malthus” with assumptions. Support both...

Q: Discuss the key idea of “Classical Dynamics of Smith and Malthus” with assumptions. Support both the theories with the help of a diagram?

Based on the theory presented by the Capital Asset Pricing Model, there are three components that...

Based on the theory presented by the Capital Asset Pricing Model, there are three components that comprise the expected return on a risky asset. Define each component and explain what role that particular component plays in determining expected return

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