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KEYNESIAN THEORY - Coggle Diagram
KEYNESIAN THEORY
aggregate demand
NX+G+I+C : represent how much of expenditure of aggregate demand is to sustain labour hires in a given period.
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some problems
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many economists believe that actually monetary policy usually is enough to stabilize the flow of nominal expenditures
tend to have a lot of faith in governments ability to time and target fiscal policy. but will it succeed?
predicts that you ether have high unemployment or high inflation, but not both at the same time.
if consumption and invesment are falling, usually government spending is going to end up falling aswell.
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Keynesian economy centrals to the modern understanding of macroeconomics; there are also some significant limitations to Keynesian ways of understanding the world