Explain the Key Concepts of Keynesian Economics

question 72

Essay

Explain the key concepts of Keynesian economics. Why do Keynesians still support monetary and fiscal policy intervention even though it is clearly not capable of perfectly "fine-tuning" the economy? Define and explain the basic equations of Keynesians and Monetarists. Hint: aggregate expenditures.

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Definitions:

Risk-Free Rate

A speculated return on an investment that is considered to have no risk of losing money, usually indicated by the performance of government securities.

Systematic Risk

A type of risk that is associated with the overall market or a particular market segment, often called market risk.

Expected Return

The average amount of profit or loss one can anticipate receiving on an investment, accounting for all possible outcomes.

Incremental Risk

The additional risk that an investment or action brings to an investor's or company's overall risk profile.