Stack Exchange Network

Stack Exchange network consists of 174 Q&A communities including Stack Overflow, the largest, most trusted online community for developers to learn, share their knowledge, and build their careers.

Visit Stack Exchange

Questions tagged [keynesian-economics]

The tag has no usage guidance.

1
vote
0answers
50 views

How is there full employment level at equilibrium level according to Keynesian theory(AD-AS approach)?

According to Keynesian theory :- Equilibrium level is the point at which Aggregate Demand curve intersects Aggregate Supply curve . And this point is termed as Full Employment Level How do we ...
1
vote
1answer
44 views

When can one read the general theory of employment,interest and money?

I am a first-year undergrad econ student and was interested in reading Keynes' book. in the preface, Keynes pointed out that the text deals in the abstract and is meant for his fellow economists. ...
0
votes
0answers
17 views

Short run Aggregate supply curve is horizontal or positively sloped?

I want to understand the adjustment process from Very short run production decision to Short run production decision to Long run production decision. As far as I've understood: consider an increase in ...
0
votes
0answers
19 views

What is the difference between horizontal short run aggregate supply curve and positively sloped short run aggregate supply curve?

Both of these curves corresponds to short run then what assumption leads to first one and what leads to second one? For horizontal SRAS we say that in the short run when we have aggregate demand of ...
2
votes
0answers
37 views

Marginal propensity to consume and multiplier effect

Recently I had a conversation with a certain person (call her X) about the marginal propensity to consume (and about the multiplier effect). With marginal propensity to consume I mean $c_1$ as a part ...
-1
votes
1answer
67 views

Equilibrium income in Simple Keynesian Model

I could not understand how to analyse the effect of the given situation in this question on government's expenditure and income. If the budget is balanced, the use of calculus technique also didn't ...
0
votes
0answers
15 views

Book recommendations : Which book provides intuitive ideas and mathematics behind IS LM model?

I've read mankiw and dornbusch but I still feel there's something missing. Haven't been able to develop the economic intuition behind various shapes of is and lm curves. I would appreciate more in-...
1
vote
2answers
75 views

What will be the effect on velocity of money when demand for real money increases?

Suppose that a change in government regulations allows banks to start paying interest on checking accounts. The money stock is the sum of currency and demand deposits, including checking accounts. (...
-2
votes
1answer
26 views

Macroeconomics- money supply LM model [closed]

why does an increase in money supply , lower the interest rate and shift the LM curve down.?
1
vote
1answer
602 views

What are the assumptions of real business cycle theory and Keynesian theory?

What are the differences between the approaches of Keynes and Real Business Cycle theorists? What are the assumptions made by both the theories? How do they differ in their methodology? Do they ...
0
votes
0answers
36 views

Is Planned Expenditures and Aggregate Demand the same thing?

In Macroeconomics, the Keynesian Cross is sometimes explained with Aggregate Demand on the vertical axis (see here) and sometimes with Planned Expenditures (see here). Are these concepts precisely the ...
0
votes
0answers
12 views

Can someone explain me the relation between effective demand in terms of wage-units and output elasticity?

I have been stuck in the next text. Can someone explain it to me? Thank you. It is possible for effective demand in terms of wage-units to increase when the output of an individual industry is ...
0
votes
2answers
91 views

Balanced budget and change in taxes

Consider a simple Keynesian economy in which the government expenditure (G) exactly equals its total tax revenue: G = tY where t is the tax rate and Y is the national income. Suppose that the ...
-1
votes
1answer
73 views

What are the differences on the impact of a universal basic income from a liberal and a keynesian point of view?

A classmate asked me this and I have no idea how to approach the question. How would I even describe the effects of the universal basic income on the labour market from a Keynesian point of view?
-2
votes
2answers
124 views

Does Keynesianism increase the incentive to invest? [closed]

Lets say you invest $1billion in a city in recession. The investment will have a multiplier, boosting the value of your investment. Thus if keynesianism was correct there would be an increased ...
0
votes
1answer
97 views

How does the government launch of Tomahawk missiles against Syria affect the economy and governmental budget?

Last night an air strike was launched against Syria of about 60 Tomahawk missiles. At approximately $832,000 apiece, this airstrike cost the US gov't about 49 million dollars. Initially, this sounds ...
5
votes
5answers
528 views

Where does capital come from?

Sorry if this is a birds and the bees type question. Where does capital come from? And I am not talking human capital (which to my mind is skills basically). I suppose I'm taking about financial ...
4
votes
1answer
188 views

Simple Keynesian model

It is given that economy is at equilibrium at $ Y_0 $ = 1000. If Government undertakes a fiscal change so that tax rate $t$, increases by 0.05 and government spending increases by 50, will the budget ...
4
votes
1answer
116 views

Keynesian Ethics

Reading Hayek and von Mises I found a bunch of strong arguments against interventionism beyond economics (philosophical and ethical aspects). The technical difference between Classical and Keynesian ...
0
votes
1answer
540 views

Simple Keynesian model of income determination

When determining equilibrium, we take consumption equal to C= ¢ + c' y where ¢ is the autonomous consumption or minimum consumption that would take place even in absence of income. What could be the ...
0
votes
1answer
336 views

Why is the consumption line and 45degree line's intersection not the equilibrium income level?

The question is as below The answer is A. I understand why it is A, but do not understand why it isn't C. Doesn't the point where the consumption line and 45 degrees line intersect represents the ...
2
votes
2answers
1k views

What is the difference between aggregate supply and GDP?

Usually when I read online, I see the following repeated frequently: aggregate demand is equal to GDP. I understand that aggregate expenditures is the aggregate demand at a particular price level, and ...
3
votes
1answer
5k views

What is the difference between the Classical and Keynesian models?

I have read something about the short and long run aggregate supplies, but I don't know what the main difference is about these two models. Does someone know the difference(s) between these two models?...
1
vote
1answer
2k views

the slope of the LM curve [duplicate]

I'm confused because my textbook says the higher interest elasticity of money demand is , the flatter slope of the LM curve is. If the interest changes, then isn't it the movement along the curve in ...
4
votes
1answer
1k views

Real world application of IS-LM model

I learnt IS-LM model but I got curious whether it is applicable to the real world. I mean it's just an model, so I doubt that the realtionship between Y and r actually exists. Are there any real life ...
3
votes
3answers
305 views

Raising interest rates to prevent inflation

I am reading a book about the Mundell-Fleming Model and I have encountered a part which says: The Fed raised U.S. interest rates several times during 1994 to prevent U.S. inflation. Isn't it the ...
2
votes
0answers
406 views

AS-LM Model and derivation of the LM curve

When we derive the LM curve, we assume that supply of money is exogenous. However, let's say the central bank has some target interest,r1, and it adjust supply of money to keep interest rates equals ...
4
votes
2answers
146 views

What would be the defining characteristic of New-Keynsian thought?

If you had to summarize New-Keynsian thought into one paragraph, or a set of equations, what would it be?
2
votes
1answer
128 views

What impact did major fiscal policy actions taken during the Great Recession (2007-09) have on U.S. economic performance?

What impact did fiscal policy actions taken during the Great Recession (2007-09) have on U.S. economic performance? Bush passed the Economic Stimulus Act of 2008 and also the Emergency Economic ...
2
votes
0answers
162 views

What major fiscal policy actions were taken during the Great Recession (2007-09)?

What major fiscal policy actions were taken during the Great Recession (2007-2009)?
2
votes
0answers
921 views

Impact of Fiscal and Monetary Policy during Great Recession on U.S. Economic Performance

What major fiscal and monetary policy actions were taken during the Great Recession (2007-2009)? What impact did they have on U.S. economic performance? I understand how how the recession occurred in ...
5
votes
3answers
842 views

How Does Keynesian Theory Address Supply Shocks, Like the California Drought?

From what I understand about Keynesian theory, when we're facing deflation, lowering interest rates or increasing government spending/lending (when consumers are cutting back) helps stimulate economic ...
1
vote
1answer
177 views

How can austerity and quantitative easing happen simultaniously?

As far as I can make out, in 2010 the UK government simultaneously started an austerity program which cut public spending, taking money out of the economy, while also enacting a quantitative easing ...
4
votes
1answer
710 views

Barro 1977: Main Message

I used to read Barro 1977 as (1) Prices not moving in a long-term contract is not sufficient for these prices to be suboptimal. That is, there can be an optimal pricing sequence in a long-term ...