In the Keynesian model, higher prices will prompt increases in the supply of goods and services.
The reason is that we want to deal with the Keynesian model in greater detail and derive policy implications from it.
Explain why the Keynesian model has come under increasing attack in recent years.
This brings us to the key difference between the Keynesian and monetarist models.
Both Keynesian models showed some stimulative effects in the short run because of the budget deficit, but not enough to reduce the deficits.
The Keynesian models used by the budget office, many argue, do not fully address how productivity can be raised over time.
According to the early Keynesian models, this will actually lead to a decline in total savings and investment.
Early Keynesian models assumed wage and other price levels were fixed.
According to a senior administration official, the job-creation forecast is based on a Keynesian model of the economy in which tax cuts increase employment.
Lucas also made an influential critique of Keynesian empirical models.