Questions tagged [keynesian-economics]
The keynesian-economics tag has no usage guidance.
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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 ...
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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 ...
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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 ...
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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 ...
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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 ...
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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
...
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Deriving Vertical LM Curve from Money Demand Curve
The statement "If money demand does not depend on the interest rate, the LM curve is vertical" is correct.
Now,
If money demand does not depend on the interest rate , then it means, ...
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Question on Keynesian Economics from Sargent’s book
While I am reading the Sargent’s book (Macroeconoic Theory, 1979) Sargent Book, I saw the following question. But I cannot find an answer for this(Question 7 in the book, page 73)
Assume an economy ...
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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 ...
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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 ...
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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
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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 ...
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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 ...
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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 ...
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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 ...
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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 ...
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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 ...
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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 ...
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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 ....
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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 ...
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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 ...
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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 ...
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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 ...
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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 ...
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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 ...
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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 ...
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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 ...
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Good source for marginal propensity to consume by country?
Is there a good data source that aggregates the MPCs of various countries?
Thanks.
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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-...
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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 ...
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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 ...
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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
...
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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, ...
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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 ...
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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 ...
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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. ...
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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 ...
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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 ...
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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 ...
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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.
(...
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Macroeconomics- money supply LM model [closed]
why does an increase in money supply , lower the interest rate and shift the LM curve down.?
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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 ...
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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
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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?
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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 ...
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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 ...
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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 ...
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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 ...
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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 ...