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Week 4: Keynesian school (Key ideas of thought Keynesian school (Economic…
Week 4: Keynesian school
Historical setting
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Keynes: The General Theory of Employment, Interest and Money (1936): Government intervention required to maintain high levels of effective demand
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Keynes-wage rigidity
In times of crises, firms cut down on production and employment.
--> Deflation only during extremely severe recession
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