About the results of increase in autonomous expenditures

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The Keynesian model and the AD/AS model are similar in many ways and different in many ways.

A. What are the characteristics of an economy in which the Keynesian model will provide a good estimate of the result of an increase in autonomous expenditures? What are the characteristics of an economy in which the Keynesian model will provide a poor estimate of the result of an increase in autonomous expenditure?

B. Show, in a few diagrams, how the slope of the AS curve affects the accuracy of the Keynesian model’s predictions about the results of an increase in autonomous expenditures.

Reference no: EM131082111

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