1. In the Keynesian framework, which of the following events might cause a recession? Which might cause inflation? Explain.

• A large increase in the price of the homes people own (3 points)
• Rapid growth in the economy of a major trading partner (3 points)
• The development of a major new technology offers profitable opportunities for business (3 points)
• The interest rate rises (3 points)

The goods imported from a major trading partner become much less expensive (3 points)