Answer to Question #181657 in Macroeconomics for Tishawna

Question

What is the Keynesian prescription for a government that is managing an economy that is contracting and there is high unemployment?  Mention one of the assumptions of Keynesian economics

Answer 1

To reduce high unemployment, according to Keynesian economics, the government should spend more resources, which would increase consumer demand in the economy.

Keynesian economics' macroeconomic analysis is based on three main assumptions: rigid costs, efficient demand, and savings-investment determinants.