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What are the three major questions about which the major schools of macroeconomics differ?
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Explain the difference between rational and adaptive expectations?
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What is the central policy implication of rational expectations theory?
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Use the Aggregate Supply-Aggregate Demand framework to contrast the adjustment process of the economy with adaptive versus rational expectations.
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Provide an economic and political critique of New Classical economics.
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Explain the Keynesian view of what causes macroeconomic instability.
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Explain the Classical-Monetarist view of what causes macroeconomic instability.
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Explain and illustrate the New Classical view of a self-correcting economy,
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Explain the Keynesian-based mainstream view of a self-correcting economy.
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Contrast the Monetarist versus New Classical views on the speed of adjustment of the economy.
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For the Monetarists, why does the enactment of a monetary rule make the most sense? Illustrate the Monetarists’ rationale for a monetary rule.
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Why do New Classical rational expectations economists also support a monetary rule?
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Provide the Keynesian defense of discretionary monetary policy.
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Provide the Keynesian defense of discretionary fiscal policy.
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Explain and illustrate “crowding out.”
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Summarize the Keynesian versus Monetarist views on the size of the crowding out effect and their policy implications.
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Why do Keynesian-based economists oppose a balanced budget rule?
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Summarize the Supply-side view of rules versus discretion.
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On what issues do the warring schools of macroeconomics converge?
