Substantial economic slumps come from falling aggregate demandthe sum of overall consumption, investment, and government spending within the economy. As a Keynesian economist, with the aid of diagrams and examples discuss the key policies (and or interventions) to stimulate the economy in the wake of a recession. 

QUESTION 2

The Cuban state asserts its adherence to socialist principles in organizing its largely state-controlled planned economy. Most of the means of production are owned and run by the government and most of the labor force is employed by the state. Recent years have seen a trend toward more private sector employment. By 2006, public sector employment was 78% and private sector 22%, compared to 91.8% to 8.2% in 1981. The government of Cuba implemented a minimum wage rate which has risen to an average of about 225 Cuban pesos a month in the primary sector. This minimum wage is supplemented by the Cuban government with free education, subsidized medical care (daily pay is reduced by 40 percent after the third day of a hospital stay), housing and some subsidized food. With the aid of diagrams examine the unintended consequences of this policy decision by government on the sector and on the economy overall. Discuss the circumstances in which such a move is justifiable.