Term
|
Definition
| There are 3 distinguishing characteristics that differentiate Kaynes from his Classical counterparts: |
|
|
Term
|
Definition
1. The general price level in the economy is assumed to be rigid or inflexible downward. Therefore, a change in nominal GDP is synonymous with the change in real GDP under most conditions. |
|
|
Term
|
Definition
2. An equilibrium level of GDP can occur while resources are less than fully employed or are underutilized. Therefore, the Great Depression of the 1930’s can be viewed as a static condition rather than a self-correcting transition period. |
|
|
Term
|
Definition
3. A nation’s productive capacity determines its potential GDP, but its actual GDP is determined by its aggregate expenditures. (C+I). |
|
|
