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Macroeconomic Externality

by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy

What is a Macroeconomic Externality?  A macroeconomic externality is where what happens at the macro level is different from and inferior to what happens at the micro level. For example, a firm should respond to a decrease in demand for its product by cutting its...

Expenditure Multiplier

by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy

What is the Expenditure Multiplier? A key concept in Keynesian economics is the expenditure multiplier. The expenditure multiplier is the idea that not only does spending affect the equilibrium level of GDP, but that spending is powerful. More precisely, it means that...

Keynesian Approach to Unemployment and Inflation

by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy

What is the Keynesian Approach to Unemployment and Inflation? Keynesian macroeconomics argues that the solution to a recession is expansionary fiscal policy, such as tax cuts to stimulate consumption and investment, or direct increases in government spending that...

Keynesian Perspective on Market Forces

by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy

What is the Keynesian Perspective on Market Forces? Ever since the birth of Keynesian economics in the 1930s, controversy has simmered over the extent to which government should play an active role in managing the economy. In the aftermath of the human devastation and...

Physical Capital Affects Productivity

by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy

How does Physical Capital Affect Productivity? Physical capital per person refers to the amount and kind of machinery and equipment available to help people get work done. Compare, for example, your productivity in typing a term paper on a typewriter to working on...
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