UNIT5_learning_journal.docx - Although not explicitly...

This preview shows page 1 out of 1 page.

Although not explicitly mentioned in Chapter 20, John Maynard Keynes is considered a foundational source in the understanding of macroeconomics. After performing research outside the textbook, please explain in three well-structured paragraphs the basic principles of the New Keynesian Economics and how it addresses perceived limitations to classic Keynesian theory. By the new Keynesian Economics, we have a modern evolution of classical Keynesian economics and the foundation of the modern macroeconomic school of thought. In particular, the new Keynesian Economics differs from the old one regarding how quickly prices and wages adjust. In fact, according to this new model, prices and wages are defined as “sticky,” as they adjust more slowly to short-term economic fluctuations, explaining such economic factors as involuntary unemployment and the impact of federal monetary policies (Liberto, 2021). Also, the new Keynesian economics wants to address the lazy behavior of prices and its cause and how sometimes government intervention is required to fight the inefficiencies caused by the

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture