Basic fundamentals of keynesian economics

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In economics we always talk about the terms, Short Run (SR) and the Long Run (LR). In fact these terms are also applicable all of us in our lives as well. Keynesian economics is based on the premise that we can move economy upward or downward with manipulating or influencing the individual components of national income or aggregate demand using appropriate monetary or fiscal policies. Instruments of monetary policy include manipulating interest rates by changing the nations money stock and the fiscal policies. For example, personal consumption can be manipulated via changing tax rates and government expenditure can be changes by an act of congress.

What are the basic fundamentals of Keynesian economics?

Reference no: EM132284765

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