文档介绍：CHAPTER 10
THE MAKING OF MODERN MACROECONOMICS
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What You Will Learn in this Chapter:
Why classical macroeconomics wasn’t adequate for the problems posed by the Great Depression
The core ideas of Keynesian economics
How challenges led to a revision of Keynesian ideas
The ideas behind new classical macroeconomics
The elements of the modern consensus, and the main remaining disputes
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The Bank of Canada Response to the 2001 Recession
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Classical Macroeconomics Money and the Price Level
Classical macroeconomics asserted that ary policy affected only the aggregate price level, not aggregate output, and that the short run was unimportant
According to the classical model, prices are fully flexible, making the aggregate supply curve vertical even in the short run
As a result, an increase in the money supply leads, other things equal, to an equal proportional rise in the aggregate price level, with no effect on aggregate output
Therefore, increases in the money supply lead to inflation, and that’s all
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Classical Macroeconomics The Business Cycle
By the 1930s, measurement of business cycles was a well-established subject, but there was no widely accepted theory of business cycles
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When Did the Business Cycle Begin? The Changing Character of the . Economy
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The Great Depression and the Keynesian Revolution
In 1936, Keynes presented his analysis of the Great Depression — his explanation of what was wrong with the economy’s alternator — in a book titled The General Theory of Employment, Interest, and Money
The school of thought that emerged out of the works of John Maynard Keynes is known as Keynesian economics
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Classical versus Keynesian Macroeconomics
One important difference between classical and Keynesian economics involves the short-run aggregate supply curve.
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Policy to Fight Recessions
The main practical consequence of Keynes’s work was that it legitimized macroeconomic policy activism — the use of ary and fiscal policy to smooth out