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Coordination Argument – Wage Stickiness

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

What is the Coordination Argument of Wage Stickiness?Keynes emphasized one particular reason why wages were sticky: the coordination argument. This argument points out that, even if most people would be willing—at least hypothetically—to see a decline in their own...

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...

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...

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...

Keynesian Assumptions – Aggregate Supply and Demand Model

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

What are the Keynesian Assumptions in the Aggregate Demand and Aggregate Supply Model? The AD/AS diagram illustrates two Keynesian assumptions—the importance of aggregate demand in causing recession and the stickiness of wages and prices. Note that because of the...
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