Explain how each of the following events or policies will affect unemployment in a neoclassical model:
tax cut for consumers
a rise in business confidence that increases investment
a fall in export sales to a major trading partner
a rise in income levels for consumers throughout the economy
cheaper imported products
a fall in government spending
What’s the difference between how a Keynesian economist would sketch an AS curve and a Phillips curve, and how a neoclassical economist would sketch an AS curve and a Phillips curve? How is the shape of the different AS curves linked to the different shape of the Phillips curves?