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Keynesian macro-economic model

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The basic (primitive) Keynesian macro-economic model focuses solely upon the determination of equilibrium in the real sector (goods market). This is made possible by the assumption that the interest rate (RD) is constant. On what grounds can it be argued that, once this highly restrictive assumption is relaxed, we are forced to talk in terms of simultaneous equilibrium in the real sector (goods market) and the financial sector (market for money)?

Reference no: EM131326279

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