What you’ll learn to do: understand the Keynesian view on changes in government spending and taxation
Here are some of the specific things you’ll learn to do in this section:
- Describe the multiplier effect
- Define the crowding out effect and explain why it occurs and how it reduces the fiscal multiplier.
- Define the Keynesian concept of the Liquidity Trap and explain why it occurs and how it reduces the effectiveness of monetary policy.
The learning activities for this section include:
- Reading: Keynesian View on Changes in Government Spending and Taxation
- Reading: Liquidity Trap
- Self Check: Liquidity Trap
- Reading: The Expenditure Multiplier
- Self Check: The Expenditure Multiplier
- Reading: Crowding Out
- Self Check: Crowding Out
Take time to review and reflect on each of these activities in order to improve your performance on the assessment for this section.