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Principles of Economics 2e

2nd Edition
Steven A. Greenlaw; David Shapiro
ISBN: 9781947172364

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BuyFindarrow_forward

Principles of Economics 2e

2nd Edition
Steven A. Greenlaw; David Shapiro
ISBN: 9781947172364
Textbook Problem

From a Keynesian point of view, which is more likely to cause a recession: aggregate demand or aggregate supply, and why?

To determine

Keynesian view point about recession is to be determined.

Explanation

According to Keynes, recession occurs when demand for goods and services is less compared to what is produced, when labor is fully employed.

According to Keynes, such a demand for goods and services is considered as aggregate demand.

Thus, recession occurs when consumers lose confidence to purchase goods and services.

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