Tag: natural-rate-hypothesis

Tag: natural-rate-hypothesis

1 page tagged natural-rate-hypothesis.

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• Chapter 50: The Keynesian View and Fiscal Policy — Economics 101

  Keynes challenged classical economics by showing that recessions can persist because wages are sticky and saving doesn’t automatically become investment. His remedy — government spending during recessions — works through a multiplier effect. But the inflation-unemployment trade-off he implied breaks down when inflation expectations shift.

Related tags

• keynesian-economics
• fiscal-policy
• multiplier-effect
• phillips-curve
• inflation-unemployment-tradeoff
• government-spending