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May 26, 2005
The Simple Keynesian Model
Our first look at this model is quite simplified.
Keynes was trying to explain why the wage rate could not be relied upon to dissipate unemployment.
Our second look (next day) added more features.
This is a case where the equations show more than does the diagram.
We derived a precursor to the IS curve.
The equilibrium condition behind the IS curve:
Add an LM curve and we have a model.
Posted by bparke at May 26, 2005 10:59 PM