Group 3 Keynesian V Neo-classical - What's the difference by Humanities https://padlet.com/BISHumanities/zx6i4vghvvy1x0rv Made with a stroke of good luck en-us 2021-01-12 17:30:08 UTC 2025-09-27 01:48:03 UTC hello@padlet.com The Keynesian AD/AS Model BISHumanities https://padlet.com/BISHumanities/zx6i4vghvvy1x0rv/wish/1079664041 Considers sticky wages]]> 2021-01-12 17:30:08 UTC https://padlet.com/BISHumanities/zx6i4vghvvy1x0rv/wish/1079664041 The Neo-classical Model BISHumanities https://padlet.com/BISHumanities/zx6i4vghvvy1x0rv/wish/1079664045 2021-01-12 17:30:08 UTC https://padlet.com/BISHumanities/zx6i4vghvvy1x0rv/wish/1079664045 What is meant by 'sticky wages', why does this matter? BISHumanities https://padlet.com/BISHumanities/zx6i4vghvvy1x0rv/wish/1079664048 2021-01-12 17:30:08 UTC https://padlet.com/BISHumanities/zx6i4vghvvy1x0rv/wish/1079664048 Why do Keynesians argue that the macroeconomy will not self-correct during an economic downturn? BISHumanities https://padlet.com/BISHumanities/zx6i4vghvvy1x0rv/wish/1079664049 2021-01-12 17:30:08 UTC https://padlet.com/BISHumanities/zx6i4vghvvy1x0rv/wish/1079664049 Why do Neo-classical economics argue that economic fluctuations in the business cycle (inflationary and deflationary gaps) will self-correct? BISHumanities https://padlet.com/BISHumanities/zx6i4vghvvy1x0rv/wish/1079664052 2021-01-12 17:30:08 UTC https://padlet.com/BISHumanities/zx6i4vghvvy1x0rv/wish/1079664052 What policies would Keynesians during an inflationary gap? BISHumanities https://padlet.com/BISHumanities/zx6i4vghvvy1x0rv/wish/1079664055 Keynesians would use a contractionary fiscal policy. Increasing taxes or reducing g spending to shift the AD curve to the left. ]]> 2021-01-12 17:30:08 UTC https://padlet.com/BISHumanities/zx6i4vghvvy1x0rv/wish/1079664055 What policies would Keynesians use in a recessionary gap? BISHumanities https://padlet.com/BISHumanities/zx6i4vghvvy1x0rv/wish/1079664057 2021-01-12 17:30:08 UTC https://padlet.com/BISHumanities/zx6i4vghvvy1x0rv/wish/1079664057 BISHumanities https://padlet.com/BISHumanities/zx6i4vghvvy1x0rv/wish/1079664069 As, according to their model, any fall in AD will result in deflation and a short term fall in realGDP. But due to it's intersection with the LRAS curve there is a return to potential GDP in the long-term. This is due to the fact that during a recession the price level will drop and this means firms and consumers can more easily make investment or purchases. This process is the same with inflationary gaps but in reverse. They argue that government spending to rectify these gaps crowds out this spending by firms and consumers in a recession.]]> 2021-01-12 17:30:08 UTC https://padlet.com/BISHumanities/zx6i4vghvvy1x0rv/wish/1079664069 Neo Classical assumption BISHumanities https://padlet.com/BISHumanities/zx6i4vghvvy1x0rv/wish/1079664104 The Neo-Classical self corrects
It assumes that prices are downwardly flexible ]]> 2021-01-12 17:30:08 UTC https://padlet.com/BISHumanities/zx6i4vghvvy1x0rv/wish/1079664104 Response https://padlet.com/BISHumanities/zx6i4vghvvy1x0rv/wish/1079714780 Workers are not willing do decrease wages so firms lay off workers.

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FOP are price constant in the shor-trun and wages is a FOP ]]> 2021-01-12 17:37:45 UTC https://padlet.com/BISHumanities/zx6i4vghvvy1x0rv/wish/1079714780 response ruari_de_rijk https://padlet.com/BISHumanities/zx6i4vghvvy1x0rv/wish/1079718886 Keynesians would use an expansionary fiscal policy to try to close the recessionary gap. The money injected into the economy to close the gap would be less than the size of the gap because of utilization of the multiplier effect]]> 2021-01-12 17:38:26 UTC https://padlet.com/BISHumanities/zx6i4vghvvy1x0rv/wish/1079718886 Addition to response https://padlet.com/BISHumanities/zx6i4vghvvy1x0rv/wish/1079732443 When firms are not able to pay workers because costs are too high, they prefer to lay off workers. Also if a firm decides to reduce wages, it affects output due to morale and other factors of production. That is why wages can only go up and sticky while going down.]]> 2021-01-12 17:40:40 UTC https://padlet.com/BISHumanities/zx6i4vghvvy1x0rv/wish/1079732443 ruari_de_rijk https://padlet.com/BISHumanities/zx6i4vghvvy1x0rv/wish/1079765294 Keynesians believe that in a downturn households will save rather than spend which will in turn cause a further downturn. Also that prices wont lower in response to downturn due to sticky wages.]]> 2021-01-12 17:46:14 UTC https://padlet.com/BISHumanities/zx6i4vghvvy1x0rv/wish/1079765294 when the FOP are constant in the Short-run, do both keynesian and Neo classical consider this like sticky wages? joseraul0053 https://padlet.com/BISHumanities/zx6i4vghvvy1x0rv/wish/1079771491 2021-01-12 17:47:19 UTC https://padlet.com/BISHumanities/zx6i4vghvvy1x0rv/wish/1079771491