Economies can experience recessionary and inflationary gaps

Reference no: EM13700869

Economies can experience recessionary and inflationary gaps.

Keynesians sometimes argue that the self-correcting mechanism (SCM) has a tough time correcting one of these situations. Which gap do they believe is problematic for the SCM and why? What are the consequences of failing to close this gap? What government policies might Keynesians recommend to close such a gap and how would they help?

Reference no: EM13700869

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