Keynesianism
MK, Unit 23
Reading p. 117
Read the text and underline the main ideas connected with classical economic theory, Keynesianism, and Monetarism.
Do the comprehension exercise on p. 118.
Fill in the gaps In the long run, excess savings cause interest rates to
___ and investment to ___ again. – classical economic t. The ___ is self-regulating. –classical economic t. ___ intervention in the economy is necessary to ___ the
business cycle. – Keynesianism Market forces could produce a durable equlibrium with
___ unemployment, ___ goods, ___ rates of income and investment. – Keynesianism
Governments shouldn’t ___ with the economy. Their only job should be to ___ a constant non-inflationary ___ in the money supply. - Monetarism
___ the money supply will only lead to inflation. - Monetarism
Fill in the gaps In the long run, excess savings cause interest rates to fall
and investment to increase again. – classical economic t. The economy is self-regulating. –classical economic t. Governmental intervention in the economy is necessary to
counteract the business cycle. – Keynesianism Market forces could produce a durable equlibrium with
high unemployment, fewer goods, reduced rates of income and investment. – Keynesianism
Governments shouldn’t interfere with the economy. Their only job should be to ensure a constant non-inflationary growth in the money supply. - Monetarism
Increasing the money supply will only lead to inflation. - Monetarism
The subprime ciris and the credit crunch
MK, Unit 14
What are these? Find the corresponding term in the reading. (MK, p. 75) People who are unlikely to repay their loan. – subprime borrowers /people with a high risk of
default A security, that an investor would buy because
(s)he wants to get a regular income from people who are paying off the mortgage on their houses.
– MBS and CDO When I bought my house, it was worth $300.000,
house prices fell, it is now worth $90.000! – the debt is greater than the value of the house
Video – Watch this at home too!!!
http://www.crisisofcredit.com/
HW
Reader, p. 32-35