Question

From a neoclassical perspective, even when the economy is in a recession if the government increases its spending it is:_______.

Answer 1

From a neoclassical perspective, even when the economy is in a recession if the government increases its spending it is: creating a stable economic environment through government taking a hands-off approach.

Neoclassical economists believe the economy will either recover from a recession or eventually contract during an expansion. This is because prices and wage rates are flexible, adjusting up or down to bring the economy back to potential GDP.

Neoclassical economists believe that an economy's investment in human, physical and technological capital, functioning in a market-oriented environment that rewards innovation, is fundamental to long-term productivity growth. I'm here. Government policies should focus on promoting these factors.

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