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Author Question: Using a graph, analyze the Great Depression from a Keynesian perspective. What happened to ... (Read 87 times)

fnuegbu

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on: Jun 30, 2018
Using a graph, analyze the Great Depression from a Keynesian perspective. What happened to unemployment?
 
  What will be an ideal response?

Question 2

At the point at which planned real consumption spending is equal to real disposable income
 
  A) the consumption function is above the 45-degree line.
  B) the consumption function intersects the savings function.
  C) the consumption function intersects the 45-degree line.
  D) the consumption function is below the 45-degree line.


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ryansturges

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Reply #1 on: Jun 30, 2018
Answer to Question 1

In the below figure, the equilibrium before the depression was at a price level of 100 and real GDP of 1 trillion. The depression was caused by a reduction in aggregate demand to AD1933. Because prices were not flexible, real GDP fell to 700 billion. The reduced output would be associated with a large increase in unemployment.

Answer to Question 2

C


fnuegbu

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Reply 2 on: Jun 30, 2018
Great answer, keep it coming :)

dantucker

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Reply 3 on: Yesterday
Thanks for the timely response, appreciate it

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