Help me for some questions.
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1. Why did the “Great Stagflation” present a huge problem to the Keynesian
Theory? Why could this theory not explain the phenomenon of stagflation?
2. Summarize Friedman’s critique of managing aggregate demand to maintain full
employment.
3. How did Friedman’s theory provide an explanation for the phenomenon of
stagflation?
4. Explain the New Classical extension of Friedman’s theory.
5. Provide a brief, coherent explanation of rational expectations. What
implications does this concept have for the efficacy of aggregate demand
management as a cure for unemployment?
6. State the key proposition of Say’s Law. What insight does it contain regarding
the nature of human cooperation under a system of division of labor?
7. Using the insight provided by Say’s Law, explain the consequences of a
significant distortion of the structure of production relative to consumer
preferences. How does the initial crisis or cluster of errors snowball into a
recession?

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