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Employment, inflation, concretionary and expansionary fiscal

Why do Keynesian economists believe that market forces do not automatically adjust for unemployment and inflation? What is their solution for the stabilization of economic fluctuations?

What is the difference between concretionary and expansionary fiscal policy?

Which do we think is more appropriate today?

Solution Summary

According to keynesian economists, it is the level of aggregate demand or effective demand that determines the level of unemployment and inflation in the economy.