Homework Answers
Answer
Option 2
prices and wages are sticky and do not adjust rapidly
The framework is based on the assumption that prices and wages are sticky and do not adjust rapidly so the economy can take longer to be in equilibrium and the government need to intervene in the market with changing AD as the government spending increases the AD shifts right and vice verse.
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The Keynesian economic framework is based on an assumption that: 1) an increase in government spending...
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