rafael asked in Social ScienceEconomics · 4 weeks ago

How Keynes Theory explain great depression by using expenditure model ?

please explain briefly as if you teach a student ;)

1 Answer

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  • Oiy
    Lv 4
    4 weeks ago

    To confirm that the business cycle is real, Keynes has proved that classical explanation is wrong in at least three things. First, price and wage cannot adjust freely to the new equilibrium in the short run. Second, it is not about the quantity of money, but the demand for money as well. Third, supply cannot always create its own demand.

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