What, according to Keynes, are the normal mechanisms for ensuring full- employment equilibrium given an increase in money demand? Discuss how each of them helps ensure full employment.

Q: increase in government spending on AE, IS, and AD

A: (i) Keynesian cross Increase in government spending increases aggregate expenditure (AE), which…

Q: If interest rates on bank loans increase, then what will happen to the planned aggregate expenditure…

A: First, let us see how the interest-rate(r)s are linked to the planned aggregate expenditure function…

Q: From a Real Business Cycle (RBC) point of view, what is the impact of a contractionary policy on an…

A: According to Real business cycle theory the recovery of the cycle, the money demand will rise.…

Q: Graphically illustrate and explain the increase in the interest rate on economic growth, inflation…

A: The AD/AS model is a macroeconomic framework that elucidates the connection between the price level…

Q: What was Keynes’s solution to the Depression?

A: Keynesian economics was first highlighted during the Great Depression because it was considered as…

Q: How would an increase in the interest rate affect consumption and investment function?

A: Consumption signifies the amount of currencies spent on buying current goods and services by the…

Q: Based on the articles “Unemployment Claims Remain Historically High” and “US Consumer Spending Rose…

A: Unemployment refers to a situation where a person is willing to work but he/she doesn't get…

Q: Please  explain and discuss supply-side economics.

A: Supply-Side Economics helps in increasing aggregate supply (AS). supply-side also helps in creasing…

Q: How is long-term growth illustrated in an AD/AS model? Draw a graph of the AD/AS model and show the…

A: Macroeconomic research provides a comprehensive forecast for the fiscal and monetary landscapes of…

Q: an IS-LM diagram.

A: The IS-LM model stands for "investment-savings" (IS) and "liquidity preference-money supply" (LM)…

Q: You are the chair of the Federal Reserve when, because of sudden loss of consumer confidence, there…

A: A period of economic decline which is temporary and results in the decline in Gross Domestic Product…

Q: What was the most “nicompoopish” belief that Keynes ridiculed?

A: The J M Keynes is known as the father of Macroeconomics.  He is the biggest critique of classical…

Q: Which of the following statements about Keynes' contribution to macroeconomics is correct? A Keynes…

A: Option B is the correct answer   Keynes argued that depressions and recessions were almost always…

Q: Briefly describe the two conclusions that can be drawn from an overview of Say’s Law with its…

A: Economics is the social science that studies the production, distribution, and consumption of goods…

Q: Brief explanation on keynesian model and its diagram

A: Aggregate Demand: It refers to the total demand for goods and services in the economy within a given…

Q: The effect of Federal Reserve action (or inaction) in the AD-AS model The following graph shows an…

A: Disclaimer: I am allowed to answer only 3 questions. The diagram discusses the long-run and…

Q: What are some limitations of the Classical Theory that Keynesian Theory learnt from and tried to…

A: Keynesian Theory  Keynesian economics is a macroeconomic theory of the economy's income spent and…

Q: Consider this frugal ungoverned closed economy with a money market. C = 100 + 0.3Y Id = 700 – 200r…

A: Equilibrium will occur when IS equation equates with LM equation.

Q: Compare and contrast the ideas of Keynes and the policies based on his ideas with the ideas and…

A: The Keynes and Supply side economics are two distinct  economic theories. Both stress upon different…

Q: Ford announces that it will add 2000 salaried jobs to its Canadian workforce this month. The…

A: Average salary 50,000 Canadian Dollars Total employees to be employed = 2000 Total Money = 100000000…

Q: Apparently, Keynes assumed stable prices regardless of the level of government money creation. Was…

A: When talking about Keynesian economics, it can be said that this theory is primarily applicable…

Q: According to Keynes, what are the three reasons individuals hold money? Provide a brief explanation…

A: As per Keynes, there are three reasons an individual holds, namely, the transaction motive, the…

Q: Explain and show in detail whether the following sentence is correct or incorrect: "For Keynes, the…

A: During a downturn of the economy, sticky prices and wages would tend to be sticky which could in…

Q: There are several graphs that can be used to illustrate Keynes' distinction between macroeconomics…

A: The aggregate demand/aggregate supply (AD/AS) model is a fundamental framework in macroeconomics…

Q: Now that you have learned about the Keynesian perspective, what do you think about it?  In your…

A: Economics is the study of how the scarce resources of society are exploited. It is a social science…

Q: Assume that the economy has an inflationary gap. Explain how the economy will remove this gap…

A: An inflationary gap measures the difference between the actual production of the economy and the…

Q: Use the Keynesian model to explain the procyclical behavior of employment, money, inflation, and…

A: Economic analysis is the process of assessing data and trends in order to gain a better…

Q: On a diagram, demonstrate the effects of (I) a fall in investment and (II) a fall in the money…

A: The IS-LM framework is a macroeconomic model used to analyze the interaction between the real…

Q: 1. An article in the Wall Street Journal criticized the concept that an increase in government…

A: Marginal Propensity to Consume (MPC): MPC is the proportion of additional income that an individual…

Q: Explain fully how the equilibrium output, income, and employment are determined in the Keynesian…

A: The Keynesian model of macroeconomic equilibrium, often referred to as the Keynesian cross model, is…

Q: In the “real world” prices are not fixed, and hence the aggregate supply curve is not completely…

A: When talking about the 'real world' economics, it can be said that it is relatively more complex…

Q: Q4. Consider a closed economy which can be characterized by the following equations: C 200+ 0.25YD I…

A: c) The simultaneous equilibrium on the goods and the money market is given by:IS: Y = 1100 -…

Q: Using a diagram, illustrate the classical economists' solution to the inflationary gap.

A: The aggregate demand curve shows the negative relationship between the price level and the real GDP,…

Q: What does the concept of "crowding out" mean in macro economics according to John Maynard Keyn

A: In some cases, the government embraces an expansionary fiscal policy position and builds its…

Q: In this question, we assume Canada is a closed economy and is in its long-run equilibrium.…

A: Meaning of IS-LM Curve: The term IS-LM curve refers to the combination between market goods and…

Q: what are the perspectives of Keynes and Say regarding employment equilibrium and government…

A: Keynesian economics, developed by British economist John Maynard Keynes, and Say's Law, proposed by…

Q: What is the effect of a termpoary increase in productivity in the Keynesian model, with sticky…

A: The sticky wage model is an economic framework that explains how wages adapt slowly to shifts in the…

Q: If workers look around and see prices rising more quickly than they had planned for, what is the…

A: Pay adjusted for inflation, or wages expressed in terms of the number of goods and services that can…

Q: According to the Keynesian economists, who reject the self-regulating economy, how does the economy…

A: Before the Keynesian economics came into existence, there was a classical believe that economy is…