Question

8. use the ad-as framework- in the simple keynesian model- to depict an economy in equilibrium with a recessionary gap. then tell why keynes believed that the government may have a management role to play in the economy

Answer 1

In managing the economy, the government may have a role to play. To lift the economy out of the recessionary gap and bring it to its Natural Real GDP level, the government may need to increase TE sufficiently, in Keynes' opinion.

What role, in Keynes' view, should the government play in the economy?

Since, in Keynes' words, "In the long run, we are all dead," governments should deal with problems now rather than waiting for long-term ones to be generated by market forces. This is not to say that Keynesians are in favor of readjusting policy to preserve full employment on a regular basis.

What does Keynes mean by the government multiplier and how does it fit into his strategy for battling the recession?

The Keynesian multiplier calculates the amount of demand that is generated for each dollar of public spending. For example, a multiplier of two generates two dollars' worth of gross domestic product (GDP) for every $1 that is spent. Most economists agree that there is just one Keynesian multiplier.

Learn more about Keynesian multiplier: brainly.com/question/24180492

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