Why did Keynes believe that the proper response to a period of recession was for the government to increase its spending? How could this policy help to combat recession? Use diagram.

Q: What is macro economy?

A: In economics, choices arise because of the presence of scarcity. There are limited resources in an…

Q: Why might it be important for policy makers to know which in zone of the SRAS curve the economy is?

A: SRAS (Short run aggregate supply): It refers which shows the positive relationship between the…

Q: Explain why is it possible that the economy will not self-correct out of a recessionary gap?

A: Self correction is viewed as movements of the short-run aggregate supply curve brought about by…

Q: A recession in the United States is likely to raise the growth of real GDP in Europe. Do you agree…

A: Since Europe is the largest trading partner with the U.S., a recession in US will have a major…

Q: Why is a slow growing economy a problem during a recession?

A: To find : Why is slow economy a problem during recession.

Q: In the Real Business Cycle model, what is the effective investment and the equilibrium investment?

A: The theory of the real business cycle has been developed from new classical macroeconomics where the…

Q: Westeros has recently discovered a new technology that would potentially increase profit for most…

A: (Since you have a posted a question with multiple sub-parts, we will solve the first three sub-part…

Q: What are inflationary and recessionary gaps in the economy? How do they impact the economy?

A: Deflation is defined as a drop in the overall price level of all products and services in a specific…

Q: Is Say’s Law or Keynes’s Law a better macroeconomic perspective for our economy ? Explain.

A: Macroeconomics is the division of economics that talks about the economy as a whole. In this, the…

Q: List and describe the 4 new concepts in economics discovered by Keynes.

A: Keynesian economics theory was developed by the British economist John Maynard Keynes in the 1930s.…

Q: In a completely closed economist , it is appropriate to write the national accounts equation in the…

A: Aggregate expenditure shows the amount of spending that occurs in an economy. At macroeconomic…

Q: What impact does full employment have on the economy?

A: When all the labor resources in an economy are utilized in an optimum manner or in the most…

Q: Briefly describe the difference between a so-called real business cycle and a more traditional…

A: Many regions of the world have experienced macroeconomic instabilities such as the Great Depression…

Q: The process of budget with making after evaluating every item of the expenditure in the economy and…

A: According to the given question Budget is considered as a detail of all the expenditure and…

Q: When real GDP declines during a recession, what typically happens to consumption, investment, and…

A: In an economy, any change in the real GDP will have a significant impact on the economic variables…

Q: Question 5. What is the name of Keynesian book published in 1936?

A: Keynesians was a British economist who believed that the primary driving force of the market economy…

Q: Why does a downshift of the consumption schedule typically involve an equal upshift of the saving…

A: Consumption schedule shows the amount of income spent on consumption. Saving schedule shows the…

Q: Keynes viewed consumption as an activity based on psychology. Discuss how the work of David Laibson…

A: Psychology-Law of Keynes: According to his view when income increases then the consumption level…

Q: John Maynard Keynes was the first to show that government policy could be used to change aggregate…

A: John Maynard Keynes is considered to be the most important and popular economist of the early…

Q: Which of the following will probably rise when the economy is in a recession?

A: “Hey, since there are multiple questions posted, we will answer first question. If you want any…

Q: Define the term recessionary gap and inflationary gap why do they occur

A: Recessionary gap refers to the situation where the output level is below the full employment level.…

Q: What two solutions did Keynes suggest as appropriate government policies in order to close a…

A: John Maynard Keynes was the propounder of fiscal policies.

Q: Y =  C +  S even when the economy is not in equilibrium.  True Or False

A: In an economy, saving is the part of income which is not spent on consumption expenditure, and so Y…

Q: How is Keynes position different from classical position with respect to wages, prices, and Say’s…

A: Classical Position on Wages, Prices and Say's law: The classical economist emphasized the…

Q: Illustrate, using a Keynesian Cross diagram,  the meaning of the term  ‘animal spirits’.

A: Animal spirits was a term coined by the famous British economist, John Maynard Keynes, to describe…

Q: Give a solution to fix a serious national recession

A: The recession is a situation of declining the Gross Domestic Product of the economy due to the…

Q: What is macro economics describe briefly?

A: Economics: It is a branch of knowledge that is related to the production, consumption, and transfer…

Q: Test What is macro economics?

A: Macroeconomics – It is the branch of economics that studies the entire functioning of a national…

Q: What is the impact of recession in our economy?

A: The economies around the globe have a limit to the amount of resources available with them. The…

Q: What happens to each sector of the economy when recession occurs?

A: The recession can be defined as a phase in the business cycle which characterised by a general…

Q: Referring to the figure, if the economy starts at point C, stagflation would be consistent with…

A: As this diagram describes, that the economy is starting from point C – where the economy is in…

Q: , which expenditure level will result in a recessionary ga

A: When the actual production in an economy is less than its potential production it is called as…

Q: How do households dissave?  Where do they get the money to finance their extra consumption?  Can…

A: Dissaving refers to the activity of spending more amount than what is earned.

Q: Using AD and AS curves determine how an increase in the government's ability to improve…

A: A recession can be characterized as a supported time of feeble or negative development in genuine…

Q: f inventories are increasing, what part of the business cycle could we be entering? Group of answer…

A: A business cycle is a cycle of fluctuations in the GDP around its long-term growth rate. It is…

Q: According to Keynesian business cycle theory, if consumption and investment fall, what will happen…

A: According to Keynes, a fall in investment leads fall in income which leads to decreases consumption…

Q: What is the best formula to measure recessionary gap?

A: The long-run macroeconomic equilibrium in an economy is determined by the aggregate demand and…