Brief History of Macroeconomic Thought and Policy
2. Keynesian Economics in the 1960s and 1970s
Try It
Draw the aggregate demand and the short-run and long-run aggregate supply curves for an economy operating with an inflationary gap. Show how expansionary fiscal and/or monetary policies would affect such an economy. Now show how this economy could experience
a recession and an increase in the price level at the same time.