Keynesian view

by | Jul 7, 2021 | Homework Help

According to the Keynesian view, why are voluntary changes in spending by the private sector NOT a reliable source of changes in aggregate expenditure?

Because the theory of private sector spending is the weakest part of Keynesian theory because what the private sector does in an economy is not factored into aggregate expenditure because neither households nor businesses can be expected to act in the interest of society if such action conflicts with their self-interest because the self-interested behavior of the private sector causes spending to increase during recessions and decrease during inflationary times…

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