Question of the Day: Day Twenty

1. Advocates of government intervention in the macroeconomy believe that markets do not necessarily clear. Explain how this perspective implies the need to deal with large decreases in the demand for labor (e.g. due to falling Aggregate Demand).

2. What do the different perspectives on macroeconomic policymaking believe about the demand for investment?

a. Given the beliefs you discuss above in Question 2, how do these different policymaking philosophies view the problem of crowding out?