Discuss what is meant by the Classical belief that the economy is self-correcting. When did this theory break apart?What might be some Keynesian prescriptions to get the economy out of an economic slump? Explain how this works.

PRINCIPLES OF MACROECONOMICS   

INSTRUCTIONS: Show your work / explain your answers or you will lose credit.

Discuss what is meant by the Classical belief that the economy is self-correcting. When did this theory break apart?What might be some Keynesian prescriptions to get the economy out of an economic slump (both fiscal and monetary)? Explain how this works

Explain stagflation. What did Paul Volcker do to combat this issue?

Explain carefully the difference between GDP and GNP.

Why aren’t intermediate goods counted in GDP?

Explain what is meant by the concept of “value added” and how it can be used to calculate GDP.

Explain the difference between calculating GDP using the expenditure approach and the income approach.

Identify which of the following item(s) would be included in U.S. GDP: (a) The output of a U.S.-owned family farm in Kansas  (b) Food stamp payments (c) Welfare checks (d) Ebay’s used goods