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A). Keynesians believe in a more managed economy, does this mean they don’t believe in capitalism?...

A). Keynesians believe in a more managed economy, does this mean they don’t believe in capitalism? Answer:

B)If an economy is consuming $19.5 trillion out of its $21.5 trillion, then what is this economy’s MPS? Answer:

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Answer #1

Answer to first question is provided :

A) Keynesians believe that during recession an expansionary fiscal policy is necessary to bail the economy out of the crisis . Some wages and prices are rigid and do not adjust automatically . Keynesians believe in government intervention , borrowing and fiscal policies and also existance of unemployment at equilibrium . Keynesians say that an economy might not achieve equilibrium or potential GDP on its own . This is external management of economy by the government . But this does not mean they advocate command economy . They believe in capitalism to run the economic forces of demand and supply .

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