The simple Keynesian model can be analyzed in terms of the aggregate demand and aggregate supply framework, and can be used to show why Keynes believed that government has an economic role to play.
1. List the variables that shift the AD curve in the simple Keynesian model.
2. Describe the Keynesian AS curve.
3. Use the AD-AS framework to depict an economy in equilibrium with a recessionary gap.
4. Tell why Keynes believed that the government may have a management role to play in the economy.