my\'s aggregate demand curve and put r to increase the econo the unemployed back
ID: 1113712 • Letter: M
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my's aggregate demand curve and put r to increase the econo the unemployed back to work Price Level, Real GDP, and Unemployment Rate, 1933-1941 Real GDP billions of Unemployment Year 1933 CPI 2009 dollars)-rate lpercem 13.0778 24.9 many-faceted 1939 139 1,163 17.2 14.6 9.9 onored and su- 1940 14.0 1,265 nember of the 1941 14.7 1,489 cial, and polit- amassed a $2 SOURCES: Bureau of Economic Analysts, National e by speculat- nipa.cfm, Table 1.1.6, Bureau of Labor Statistics nal currencies, Consumer Price Index, http://data.bls.govlcgi-bin/ se CPI index surveymost?cu and Economic Report of the President, he equivalent content-detail.html, Table B-11. ars.) In addi Income Accounts, http://www.bea.gov/ ITable/index 2015, http://www.gpo.gov/fdsys/pkg/ERP-2012/ fortune for s a trustee of ased its en- ANALYZE THE ISSUE Was Keynes correct? Based on the ific scholar above data, use the aggregate de- d for The mand and aggregate supply model d in 1936.to explain Keynes's theory that attackincreases in aggregate demand capitalism propel an economy toward full severe re-employment. model on L cing Macmillan, 1936), p. 383.Explanation / Answer
Looking at the above data the unemployment level decreases as the Real GDP increases or expenditure on final goods and service increases. The increase in expenditure can be considered as increase in aggregate demand . Using AS- AD model as expenditure increases AD curve shifts towards as a result output increases.This increase in output is supported by an increased level of hiring. Thus, economy moves toward full employment level.
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