Unit 5: Models of Output Determination

What’s in This Chapter? The theories of John Maynard Keynes became increasingly popular as the problems of the Great Depression of the 1930s worsened. The economy was experiencing a significant downward spiral, and people...

Keynesian Economics This unit describes the Keynesian economic model. Keynes’s model was the most influential in economics in the twentieth century. It became widely accepted after the Great Depression, and was almost...

Keynes’s General Theory John Maynard Keynes wrote  A Treatise on Money (1930) and his most famous work, The General Theory of Employment, Interest and Money (1936), around the time of the Great Depression. During the Great...

The Keynesian model is based on the belief that demand drives the economy and that a shortfall in demand causes recessions and depressions. According to Keynes, if we can find ways to stimulate consumption and other forms of...

How a Change in Taxes Affects GDP If an increase in government spending leads to an increase in total spending and GDP, then an increase in taxes must lead to a decrease in total spending and GDP, and vice versa. When the...

Demand Side Economics Keynes’s model is a “demand-side” model. Keynes believes that as long as there is enough demand, production (supply) will be sufficient and full employment will result. In order to...

The Aggregate Demand Curve In Unit 2, we learned that a demand curve illustrates the relationship between quantity demanded and the price of one product. In this unit, we discuss Aggregate demand. Aggregate demand represents the...

  Time limit: 0 Quiz-summary 0 of 10 questions completed Questions: 1 2 3 4 5 6 7 8 9 10 Information This is a ten question multiple-choice quiz covering the material in this Unit. I hope you do well! You have already...