{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

Macronotes2 - Went over Test class canceled Macronotes Cont...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
2/20/08 Macronotes Cont. Went over Test class canceled 2/27/08 Chapter 8: Keynesian Economics I. Great Depression a. Unemployment was 25% b. Why is the economy not fixing itself II. Economist John Maynard Keynes challenges the classical theory. According to him: a. Economy is not self-correcting b. Says law is not correct – instead demand creates supply c. Prices, wages, & interest rates are not flexible in the short run, only in the long run III.Keynesian theory a. Inadequate demand causes recessions i. “weak demand” – firms reduce output & lay-off workers – high unemployment ii. Need to increase demand/spending b. Economy may become “stuck” in a recessionary or inflationary gap i. Equilibrium may reach the natural level until the very long run c. Active role of government
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
i. Increase demand by: 1. Decrease taxes 2. Increase government spending ii. Economy may experience fluctuations without government intervention d. Short run view of the economy i. More concerned with immediate effects of policies IV. Aggregate spending (= c+i+g + net exports) a. Consumption i. Disposable income
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

Page1 / 7

Macronotes2 - Went over Test class canceled Macronotes Cont...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon bookmark
Ask a homework question - tutors are online