1. If the economy experiences a recessionary gap, how does the new classical approach to macroeconomic policy (to eliminate the gap) differ from the Keynesian approach? Compare and contrast the classical and Keynesian views of aggregate demand and aggregate supply.
2. Explain one real-world event that supports the Classical theory and Keynesian theory (two separate events for each theory).
require government intervention (i.e Great Depression, Auto Industry failure,
etc.)? Why or why not?
4. In dealing with the recession of 2008, why is it
important for the Fed and Congress to coordinate monetary and fiscal policy measures?
Bernanke, Ben S. (2009) “The Crisis and the Policy
Response” (speech, London School of Economics, January 13, 2009).
Uchitelle, Louis. (2009) “Economists Warm to Government
Spending but Debate Its Form,” New York Times, January 7, 2009, p. B1.
