Monetary and Fiscal Policy in Keynesian Economics

Keynesian Macroeconomic Policy

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In Keynesian view, the best macroeconomic policy is to:

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In Keynesian economics, fluctuations in aggregate demand are a major source of movements in the economy. Equilibrium occurs at any output level which equals the spending level. To maintain an equilibrium at the maximum sustainable real GDP, Keynesians prescribe regulating the planned aggregate expenditures to equal the potential real GDP.