The Great Recession - Intermediate Macro Exam 2

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4 Terms

1
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According to the Keynesians, which of the following is a reason aggregate demand fell in 2008?

Unemployment and lower income, resulting from a drop in consumer spending and investment, meant governments took in less in tax revenue. This caused government spending to drop.

2
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According to the real business cycle theorists, why was recovery so slow?

Policy uncertainty.

Higher taxes.

3
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According to market monetarists, what caused aggregate demand to fall in 2008?

Fed policy was not expansionary enough.

4
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According to the Austrians, which of the following was not a cause of the Great Recession?

Housing price controls distorted price signals