Brief History of Macroeconomic Thought and Policy
Read this chapter to examine macroeconomic attitudes towards economic policies of the three main schools of economic thought: Classical, Keynesian, and Monetarist. Also, learn about modern day interpretations of the main ideas.
2. Keynesian Economics in the 1960s and 1970s
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.