Keynesian Macroeconomics - Case Study Example

IS-LM graphical model remains a very important part in explaining the changes that occur in various macroeconomic factors after a change in the independent macroeconomic variables.... The model was developed by Keynes.... hellip; Using the IS-LM framework IS/LM stands for Investment-Saving/Liquidity Preference-Money Supply....

Ass 5.... Basic Macroeconomic Problems Name: Institution: Course: Tutor: Date: Ass 5.... Basic Macroeconomic Problems 1.... Unemployment rate refers to a proportion of unemployed people divided by the total labor force (Hall & Lieberman, 2010).... Whereby, labor force include all those people who have not attained retirement age and are actively working or searching for a job (Hall & Lieberman, 2010)....

Inflation is one of the most widely discussed topics in macroeconomics in the US economy.... This paper shall explore the causes of inflation based on three major theories, the keynesian view, the rational expectations theory and the monetarist theory.... The keynesian view asserts that changes in money supply in the economy do not directly affect the prices of goods and services, inflation results from economic pressures that are manifested in the increases prices of goods and services....

Policy ineffectiveness proposition was proposed by Thomas J Sargent in 1976 and this theory is based upon the rational expectations theory.... The rational expectations theory is the basis for the policy ineffectiveness proposition, the rational expectations theory states that… e optimal forecast be used to predict the future but this does not take the human judgments into consideration and assumes that humans do not make mistakes which are systematic this theory is in stark contrast with previous economic theories which were actually based on the ive expectations theory which says that people form their expectations of the future from what ever has happened in the past for example if inflation rates have been high in the past the people would revise their expectations of the inflation rates in the future because this is what has happened in the past and people would naturally behave in this manner because if this is what has happened in the past then people will expect it to happen in the future as well....

The following is a very simple representation of his theory known as the Simple keynesian Model.... The central idea of keynesian model is the output to be at the equilibrium level, it has to be equated with the aggregate demand.... So we may write: So, the equilibrium condition for output in Simple keynesian Model is desired business investment equal to realized investment....

In a closed or keynesian economy the savings-investment The saving-investment is derived twice in this report once in the simplest way and then by adding other components of savings.... The second part of this report delved into the aggregate demand and supply side of keynesian economics.... The keynesian aggregate supply curve is studied in details.... A typical keynesian AS curve is reverse L-shaped with a sharp connecting point....

It is a descriptive account of a community or culture (Hammersly, M.... and Atkinson, P.... 2007).... It is used when the researcher wants to understand the way of living of a particular group of people.... In ethnography,… According to the National Alliance to End Homelessness (2006), about 50% of people living with HIV/AIDS in developing countries are homeless....

Keynesian Macroeconomics without the LM Curve.... The economic growth is measured using the real gross domestic product that is the value of goods and services in an economy (Landefeld et al.... 2008).... hellip; Growth occurs when an economy employs new technology, allows specialization, new production methods, discovery of new raw materials and when it increases What I have Learned Economic growth is the increase in the market value of goods and services that an economy produces over a period of time....