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Answer to Question #967 in Macroeconomics for Fahim Mahmud
Question #967
According to Keynes, a decrease in Consumption is not necessarily matched by a proportionate increase in investment.
a) Why might this be the case? Explain the answer by contrasting Keynesian approach with the Classical approach.
b) According to Keynes, what will happen to the AD curve if Saving rises, ceteris paribus? (Will there be a shift or will the AD curve remain unchanged?)
a) Why might this be the case? Explain the answer by contrasting Keynesian approach with the Classical approach.
b) According to Keynes, what will happen to the AD curve if Saving rises, ceteris paribus? (Will there be a shift or will the AD curve remain unchanged?)
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