Keynesian Macroeconomic Theory

  • Apostolos Serletis

Abstract

In Chapter 1 we began our discussion of macroeconomic theory with a view of nominal wages and prices as fully flexible. This approach ensures that markets are always in equilibrium, in the sense that there is continual balance between the quantities demanded and the quantities supplied. The classical model was the dominant macroeconomic theory until the Great Depression in the 1930s. The prolonged unemployment, however, in the United Kingdom and the United States during the 1930s prompted John Maynard Keynes to significantly depart from the classical assumption of perfectly flexible prices and develop models based on the assumption that there are constraints on the flexibility of some prices.

Keywords

Interest Rate Aggregate Demand Money Demand Nominal Interest Rate Aggregate Supply 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

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Copyright information

© Springer Science+Business Media New York 2001

Authors and Affiliations

  • Apostolos Serletis
    • 1
  1. 1.University of CalgaryCanada

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