October 13, 2019

MACROECONOMIC THOUGHTS.PART 11

instrument speaks volume of this theory of fiscal stimulus.It says every injection of government spending will lead to more business activity and much more spending.The theory proposes spending by nature boosts agregate output and skyrockets income generation.That workers extraincome would balloon gross domestic product beyond its initial stimulus proportion.The marginal propensity to consume is a function of the magnitude of keynesian multiplier as one workers spending spiral income for the next worker and the cyclical tradition of the worker's income being perpetually spent refers to the multiplier.keynesians say individuals should spend less and spend more,growing marginal propensity to consume,generate full employment and ensure economic growth.The demand side model dominated academic circles for decades unchallenged until the emergence of new generation of neoliberal economists such Milton Friendman and Murray Rothbard challenged him.The famous 1936 book that responded to time exigency then would not be

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