Political Economy Keynesian Economics Questions
Keynesian Economics views inflation as a result of excess demand in the economy. According to this perspective, inflation occurs when aggregate demand exceeds the available supply of goods and services, leading to an increase in prices. Keynesian economists argue that inflation can be managed through government intervention, such as fiscal and monetary policies, to control aggregate demand and stabilize the economy. They believe that a moderate level of inflation can be beneficial for economic growth and employment, but excessive inflation can have negative consequences, such as eroding purchasing power and creating uncertainty in the economy.