Government expenditure.
limitation of keynesian theory??
In a nutshell, the key determinants that affect investment are:The Keynesian Marginal Efficiency of Capital Theory, I=f(r)The Keynesian explanation if there is non ceteris paribus, I=f(all other factors)The Accelerator TheoryThe role of firms' profitsAnd then a collection of the other factors, being exchange rates et cetera.
Keynesian model is able to show how leakages and injections can influence the economy. AD-AS model is able to show changes in prices (inflation).
The four sectors in Keynesian macroeconomic model are business, household, foreign sector and government. The Keynesian macroeconomics focuses on a broad scale where the above mentioned sectors play an important role.
The major difference between the classical model and the Keynesian model is their approach to government intervention in the economy. The classical model believes in a hands-off approach, where the economy will naturally correct itself, while the Keynesian model advocates for government intervention to stimulate economic growth and stabilize fluctuations.
limitation of keynesian theory??
In a nutshell, the key determinants that affect investment are:The Keynesian Marginal Efficiency of Capital Theory, I=f(r)The Keynesian explanation if there is non ceteris paribus, I=f(all other factors)The Accelerator TheoryThe role of firms' profitsAnd then a collection of the other factors, being exchange rates et cetera.
Keynesian model is able to show how leakages and injections can influence the economy. AD-AS model is able to show changes in prices (inflation).
The four sectors in Keynesian macroeconomic model are business, household, foreign sector and government. The Keynesian macroeconomics focuses on a broad scale where the above mentioned sectors play an important role.
The major difference between the classical model and the Keynesian model is their approach to government intervention in the economy. The classical model believes in a hands-off approach, where the economy will naturally correct itself, while the Keynesian model advocates for government intervention to stimulate economic growth and stabilize fluctuations.
by looking at it
In the monetarist model, a difference between desired spending and income is caused by either an excess demand for money (MD > MS) or an excess supply of money (MS > MD). An excess demand for money reduces desired spending, and an excess supply increases it. In the Keynesian model, changes in desired spending (particularly in desired investment spending) cause the difference.
exogenous and constant
Income and taxes
The Keynesian transmission mechanism is the process whereby changes in the monetary sector (increase or decrease in the interest rate i) have an impact in the real sector, by increasing or decreasing Investment (I), otherwise known as Capital Formation. There is an inverse or negative relationship between the two - this means that as the interest rate i increases, the capital formation or investment in the economy I decreases.
Speed up
What factors affect the rate of return of an investment at maturity?