Questions tagged [keynesian-economics]

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Which Spanish scholastic economist said that economies could not be controlled even if one could track every transaction?

Which Spanish scholastic economist said that economies could not be controlled even if one could track every transaction? I think the context was an argument against Keynesian economics, Cartesian ...
Geremia's user avatar
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two real gdp at the same price level in ad as model

in a macro book of arnold i see an agg demand-supply model where it seems above the equilibrium price level there are two real gdp for the same price level. the book then goes on to explain that there ...
Adnan's user avatar
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does the income-output-expenditure method of getting real gdp hold in ad as model

in the ad as model, it seems there's two different real gdp for a given price level when in disequilibrium. does this mean the real gdp counted from the demand side is not equal to the real gdp ...
Adnan's user avatar
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difference between quantity of real gdp demanded and quantity of real gdp supplied and real gdp

I can't seem to understand why the agg demand curve and agg supply curve both have real gdp at the horizontal axis and price level at the vertical axis. How can the relation between two same ...
Adnan's user avatar
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Saving equals investment according to Keynes

In "The General Theory of Employment, Interest and Money", Chapter 6 The Definition of Income Saving and Investment, John Maynard Keynes says: Income = value of output = consumption + ...
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Secondary money market effects of expansionary monetary policy using IS-LM model

According to the basic IS-LM model, an outward shift of the LM curve results in higher output because (as shown with the money market chart) expansionary monetary policy reduces the interest rate, ...
alvalentini's user avatar
2 votes
1 answer
77 views

Why is full employment desired in an economy if competition promotes innovation?

Why is full employment desired in an economy if competition promotes innovation? In the simple Keynesian model, full employment equilibrium is a desired outcome, as everyone is employed. However, if ...
math and physics forever's user avatar
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Keynesian vs classical consumption functions

I am new to studying Economics and am at a loss of intuition to understand the difference between the Classical and Keynesian systems. The following is my understanding of the two theories: The ...
Harsh Sharma's user avatar
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A question on short run equilibrium in the simple Keynesian model

In the simple Keynesian model , it's generally assumed that there are no technological changes in the short run. However, as this is a macroeconomic model, changes in one or 2 industries, shouldn't ...
math and physics forever's user avatar
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In the simple Keynesian model, is full employment of resources really desirable?

In almost every introductory macro economics class, while studying the simple Keynesian model, students are always taught that everyone in the economy always works to achieve full employment of ...
math and physics forever's user avatar
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A question on the simple Keynesian model

In the simple keynesian model, the equilibrium is usually calculauted by dteremining where the aggreagate supply curve meets the aggregate demand curve curve, with the AS curve , usually taken to be a ...
math and physics forever's user avatar
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Why Increase in Money Supply Reduces Interest Rate in Money Market?

I understand the fact the Increase in Money Supply reduces the interest rate in Money Market. But these two explanations are confusing me a lot. I'm not able to understand which is correct. Reason 1 ...
Rakesh Poddar's user avatar
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1 answer
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Godley-Lavoie private bank model

Good evening everyone ! I'm currently reading Godley and Lavoie Monetary economics. It's really an awesome book, and I'm at the 7th chapter where they introduce private bank money. The model is very ...
Alexandre Michaud's user avatar
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1 answer
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Post-Keynesian theory and households?

"money must be introduced as part of the production process. Such a process is inherently dynamic, as entrepreneurs in each period must produce a new flow of commodities.” and households have no ...
emma's user avatar
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1 vote
2 answers
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Saving equals to investment [closed]

How saving equals to investment only in equilibrium? I'm confused see attached pic Nd please tell me does it can be true in general too
darshh's user avatar
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Large National Debt by borrowing money from foreign sources

I have a question about the greater severity of large national debt caused by borrowing from foreign sources. I am reading a book about elementary Economics and am currently on a chapter discussing ...
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Loosely speaking, are all modern economies 'Keynesian' in their stance on spending during downturns?

Keynesian economics is defined as: increased government expenditures and lower taxes to stimulate demand and pull the global economy out of the depression. Do all modern economies adopt a Keynesian ...
stevec's user avatar
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How did investment go from exogenous to endogenous in the IS/LM model?

Context: I am currently taking an introductory course to macroeconomics and we are on the topic of Keynesian Economic and the IS/LM model. Initially we saw that the investment (I) component of ...
confusion's user avatar
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1 answer
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IS LM CURVE QUESTİON

For keynesian model, Describe how, if at all, each of the following development affect the IS and/or the LM curve, and the equilibrium (r; Y ): Investment demand becomes less sensitive to the interest ...
studentp's user avatar
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What would monetarists do when interest rates approach zero and become ineffective?

So monetarist economists such as Milton Friedman focus on managing the money supply and lower interest rates as a solution to economic downturn. But what would they do in a recession as the interest ...
CountDOOKU's user avatar
2 votes
1 answer
83 views

Why is Keynes attacking the (neo)classical theory of interest rates on the grounds that it is indeterminate?

I do understand that he argues that in order to draw the loanable funds supply curve, you have to already know the volume of income, i.e. production, and therefore the interest rate in advance. But ...
Julius Himmel's user avatar
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loanable funds theory: why is the supply of loanable funds equal to saving (+ dishoarding + new money)?

It seems that the loanable funds theory suggests that all that is saved is supplied in the market for loanable funds. This makes sense when we are talking about 'household saving' (i.e. household ...
Julius Himmel's user avatar
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1 answer
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Why Keynesians prefer short run measures despite straight long-run Phillips curve?

I was studying about the Monetarists' and Keynesians' view of the Phillips curve and natural rate theory of Friedman. It seems intuitive to me as to why Friedman argues that using an expansionary ...
Harsh Sharma's user avatar
5 votes
2 answers
425 views

Keynes' conception of investment

Keynes defines saving as equal to investment, saying: "Having now defined both income and consumption, the definition of saving, which is the excess of income over consumption, naturally follows ....
H Huang's user avatar
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1 answer
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Would directing more money to science and research and development be an effective response to recessions?

Typical responses to recessions is to follow Keynesian economics and support demand. Would directing money towards science and research and development be a better long term solution to recessions ...
Scc33's user avatar
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1 answer
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Is Keynesian economic theory still considered capitalism?

When we compare neoclassical economic theory with Keynesian economic theory as they pertain to capitalism, do they both fall within the spectrum of capitalism? or is Keynes's idea of state ...
hmmk's user avatar
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Keynesian cross. Can there be a situation when the point of equilibirum "runs away", shifts in response to attempts to reach it?

In Keynesian cross model, as far as I understand, income-expenditure equilibirum is reached this way: when unplanned inventory investment>0, then firms produce less, when unplanned inventory ...
KarmaPeasant's user avatar
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Demand-side effects meaning

I found the term of demand-side effects in the abstract of the following paper: journals-sagepub-com/ DOI/abs/10.1177/0974930619872083 . What does that mean? Can you explain it to me please? I need ...
ada109's user avatar
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1 answer
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Trying to understanding Mark Blyth’s statement about Keynes

I am reading a book called "Austerity, the history of a dangerous idea" written by Mark Blyth. While talking about Keynes, the author writes: "he [Keynes] showed that although any worker can ...
Johnathan's user avatar
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2 answers
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Real wages fluctuation as per classical economics

I have just started studying Macroeconomics and have noticed that as per the Classical economics, the real wage level will always remain same because any change in price level in the market is ...
Harsh Sharma's user avatar
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1 answer
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How can autonomous private spending change budget surplus?

I was reading Keynesian economics in R.Dornbusch's book where he mentioned the defects of using budget surplus as a measure where he says it can be changed and effected by autonomous private spending ...
Veb's user avatar
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4 votes
3 answers
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Do Keyensians believe that it's wrong for households to aggresively save money?

Many Austrian/Neoclassical websites argue that Keynes and Keynesians demonise saving and encourage individual people to spend rather than save. Someone (not an economist) recently told me that I need ...
Statsanalyst's user avatar
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1 answer
812 views

Good source for marginal propensity to consume by country?

Is there a good data source that aggregates the MPCs of various countries? Thanks.
june18's user avatar
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1 answer
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What is "industrial capitalism"?

What's the difference between "industrial capitalism" and "agrarian capitalism" and "mercantilism" and the "industrial revolution" and the 20th century ideas of "Keynesianism"? Is agrarian capitalism-...
Nulas's user avatar
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-1 votes
1 answer
107 views

Why incomes should decline in equilibrium state

According to Keynes, the prosperity of a population is measured by the aggregated income of each individual. Spending this income keeps the economy away from a depression. If there is too much ...
spacemonkey's user avatar
1 vote
0 answers
35 views

Difference between IS curve viewed by Keynes and by Friedman

In my economics lectures, we are going through Keynes vs Friedman. As far as I got we have a downward sloping IS curve in the IS-LM model. We get this curve from the Keynesian cross when the rate of ...
Mike's user avatar
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-1 votes
1 answer
951 views

Keynesian-cross analysis [closed]

I have a question from my textbook which is: Using the Keynesian-cross analysis, assume that the consumption function is given by C = 100 + 0.6(Y – T). If planned investment is 100 and T is 100, then ...
Slim Shady's user avatar
1 vote
1 answer
173 views

IS-LM - Effect of interest rate on price level

I'm starting to study the Keynesian theory, and I have just read that the increase of interest rate ($r$) will lower the price level ($P$). I tried to understand this using the IS-LM model (I mean, ...
Vinícius Lopes Simões's user avatar
1 vote
1 answer
566 views

Keynesian Cross and Balanced Budget Multiplier

Hi! I am trying to understand the problem above, and was wondering if someone could help me with the last question. I think I am fine with all other questions. Here is my attempt: (i) The fiscal ...
Dila's user avatar
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1 vote
0 answers
232 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 ...
JIM's user avatar
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1 vote
1 answer
782 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. ...
NoLifeKing's user avatar
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1 answer
5k 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 ...
Shoaib Ashraf's user avatar
2 votes
0 answers
124 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 ...
PAS's user avatar
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-1 votes
1 answer
147 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 ...
divya garg's user avatar
1 vote
2 answers
948 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. (...
Shoaib Ashraf's user avatar
-1 votes
1 answer
42 views

Macroeconomics- money supply LM model [closed]

why does an increase in money supply , lower the interest rate and shift the LM curve down.?
statisticsinquisitive's user avatar
1 vote
1 answer
3k 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 ...
Ishan Kashyap Hazarika's user avatar
0 votes
2 answers
282 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 ...
Meera Unni's user avatar
-1 votes
1 answer
242 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?
user366148's user avatar
-1 votes
2 answers
196 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 ...
Liu's user avatar
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