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    Classical and Keynesian schools of economics

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    Question One

    Contrast the revenue sources of state and local government vs. the federal government. What are the primary sources of funding for the two levels of government?

    Contrast the allocation of spending for state and local government vs. the federal government. Why do you think the two levels of government have different expenditure priorities?

    Question Two

    What are the differences between the Classical and Keynesian schools of economics?

    What was each schoolâ??s response to the Great Depression? How was the Great Depression ultimately alleviated?

    Question Three

    What is the reserve ratio? What are excess reserves?

    What is the difference between the simple and approximate real-world money multipliers?

    Question Four

    Explain the U.S. gold standardâ??s historical relationship to a fixed exchange rate system and monetary policy.

    Describe the history of revisions to the U.S. gold standard and its eventual abandonment. What is the basis of U.S. currencyâ??s value today?

    Question Five

    Describe the U.S. debt-to-GDP ratio from the 1950â??s to the present. What was its peak period and its nadir?

    Why is the debt-to-GDP ratio an important indicator to economists?

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    Solution Summary

    Classical and Keynesian schools of economics are clarified.