Question: #1435

ECO372 Week 2 Discussion Question 2

Why do Keynesian economists believe market forces do not automatically adjust for unemployment and inflation? What is their solution for stabilizing economic fluctuations? Why do they believe changes in government spending affect the economy differently than changes in income taxes?

Solution: #1417

ECO372 Week 2 Discussion Question 2

Keynesian economics believed that in the short-term prices were practically fixed.  As a result, the Keynesian multiplier model was of no use in the 1970's when inflation was ramp...

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