The two principles that make a person a “Keynesian” consist of the ideology that the private economy may not reach full employment and that government spending can spur the economy into filling the gap. Give two examples that may be applied to the real world.

John Maynard Keynes spearheaded a new school of macroeconomic theory during the Great Depression. Which of the following represents a Keynesian point of view of macroeconomics?

None

51. What is the essence of "Keynesianism"? That is, what is/are the indispensable

One practical limitation with Keynesian economics is the challenge of implementing active economic policy quickly. How severe is this problem and why? What is one example?

Friedman and Schwartz, Keynes, Hayek and Robins, Schumpeter, Hansen and Wilson, and Temin emphasize different forces in terms of the causes of the depression and it’s severity. Contrast the Keynesian view with two of the others that we have discussed.

Which of the following statements of fact about the role of the Canadian government in the economy is MOST consistent with Keynesian economic theory? a. Canadian Crown corporations, such as Canada Post and the Canadian Dairy Commission, are run at a a cost to taxpayers b. The regulation of industry in Canada ensure worker safety standards are met. c. Crown corporations provide competition to the private sector of the economy d. The Canadian government, through the Bank of Canada, can increase or decrease the rate of economic growth

Suppose the economy goes into a recession. Which statement reflects a Keynesian response, and which reflects a neoclassical response? A. "The recession is likely caused by bad government policy, so active policy to solve the problem should be avoided" B. "The government should use fiscal policy to boost spending" 1. Neoclassical 2. Keynesian

Based on what you know about the Classical Economic School of Thought and the Keynesian Economic School of Thought, fill in the missing portions (1-5) of the chart below on the different perspectives: CLASSICAL ECONOMISTS Output produced is equal to KEYNESIAN ECONOMISTS SAY'S LAW amount demanded. Holds in a 1 money economy. SAVINGS 2 ลง Amount invested is inversely Savings and interest rates may not have a direct relationship. High interest rates may allow people to save less. related to interest rates. INVESTMENT 3 Businesses invest more at lower interest rates. PRICES 4 Inflexible WAGES Flexible 5

Without government intervention, would the economy fluctuate more or less over the business cycle? Contrast the two views on this issue. Be sure to address both the inherent stability of the market economy as well as the impact of government interventions to steer the economy.