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Macroeconomic Events

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Please help me understand how macroeconomic events impact asset values in both the short and long run. Please include monetary and fiscal policy and shocks in the explanation.

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Macroeconomic shocks refer to sudden changes that occur in a country's macroeconomic situation. It is an economic shock that manifests at the macroeconomic level. Macroeconomic shocks have strong impacts on where people will invest. They also have an effect on the wealth of those who buy and sell in these markets. Market shocks lead people to decide in the sector in which they invest. Macroeconomic shocks also determine where people will invest and what returns they will get for their investment. Macroeconomic shocks immediately after the purchase of assets will have long term effects on the value of assets purchased. Macroeconomic shocks long after the purchase of assets or close to the assets being written of have a short run effect on the value of the assets. The exogenous shock affects the ...

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This solution discusses the effect of macroeconomic events on the economy.

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The Two Branches of Macro-Economic Theory: Thinking Like a Macro-Economist

Macro-economics is perhaps the most divisive area of economics when applied to political decision making, and macro-economists divide themselves into different schools of thought. Two of the biggest camps are the Keynesians and the Monetarists. Keynesians and post-Keynesians follow the theories of John Maynard Keynes, the most-celebrated economist of the 20th century who proposed that government stabilize the economy with the use of fiscal policy. Monetarists, on the other hand, follow the teachings of Friedrich Hayek. For this assignment do some research on the ideas of Keynes and Hayek. Focus on the "big picture" of what their main ideas are and how they have influenced policy makers. Then write a 3 to 4-page paper addressing the following questions:

1. Compare and contrast what policies Keynes and Hayek advocated regarding how the federal government should manage the economy. (Note: There is no need to include biographical information about their lives)

2. Explain one real-world event that counters the theories of each of the following: Classical, New Classical, Keynesian, New Keynesian, and Monetarist.

3. Explain one real-world event that supports the theories of each of the following: Classical, New Classical, Keynesian, New Keynesian, and Monetarist.

4. You have learned that Keynes and Friedman sharply differed on some basic ideas of how the Federal government should conduct economic policy. Which of the two economists do you agree with more, and explain why.

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