Macro- & Monetary Economics

Prio: Normal, Part II: Keynes, Type: MC, Quiz 2

In the Keynesian theory (sticky wage model), fiscal policy can fight Keynesian unemployment because

  • it triggers crowding out
  • it lowers the real interest rate and hence stimulates investment demand
     
  • it facilitates expansionary monetary policy
     
  • it directly raises demand via government spending
     
 

Diskussion