Chapter 25: Q. 8 (page 622)
Name some economic events not related to government policy that could cause aggregate demand to shift.
Short Answer
Exports and Imports, Consumption and Investments
Chapter 25: Q. 8 (page 622)
Name some economic events not related to government policy that could cause aggregate demand to shift.
Exports and Imports, Consumption and Investments
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Why do sticky wages and prices increase the impact of an economic downturn on unemployment and recession?
Does Keynesian economics require government to set controls on prices, wages, or interest rates?
What is the Keynesian prescription for recession? For inflation?
In the Keynesian framework, which of the following events might cause a recession? Which might cause
inflation? Sketch AD/AS diagrams to illustrate your answers.
a. A large increase in the price of the homes people own.
b. Rapid growth in the economy of a major trading partner.
c. The development of a major new technology offers profitable opportunities for business.
d. The interest rate rises.
e. The good imported from a major trading partner become much less expensive.
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