Essay: Keynesians belief

19 Oct

Essay: Keynesians belief

Sample Essay

Keynesians have the belief that, since prices are rigid, fluctuations in government expenditures, investment or consumption lead to fluctuation of the output.  Keynesians include multiplier effect in their argument although the multiplier can’t exceed 1.0 but should be exceeding zero. Keynesians also believe that price especially wages react very slowly to the changes in demand and supply leading to surpluses and shortages mostly of labor. This is accepted by many prominent monetarists.

Keynesians feel that the classical unemployment level is not ideal because unemployment id determined by the impulse of total demand and also prices adjust but only gradually. Keynesians see unemployment levels as being too variable and too high. The Keynesians also seem convinced that depression or recessions periods are economic troubles. Almost all Keynesians advocate for advanced stabilization strategies to decrease the business cycle amplitudes. Monetarists disagree by doubting the effectiveness of policy stabilization. Many Keynesians seem more anxious about fighting unemployment than on winning inflation. The Keynesians in general advocate for aggressive expansionist rules.

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