Makroøkonomisk ligevægt og multiplikatoren i Grækenland

The main policies suggested in the article was to “higher investment and tax cuts”. By doing this, it affects the savings and investment which increases the productive capacity in the economy. In this case, it would affect Greece completely because it is such a poor country, with so many low-income earners. This would also mean that for example new businesses would succeed enormously, if these policies were to be implement. An increase in real output and the average price level would mean higher investments and consumer/social spending. The aggregate demand curve would shift up the short run aggregate supply curve and would create a new equilibrium, along the lines of also expecting a decrease from 17.4-15.6% in unemployment.

This also means that the real GDP is larger than the potential full employment GDP, because of an inflationary gap. All in all, the policies mentioned, would have a good effect on their economy.

The Keynesian economic model

As cited before, the policies would have a good effect on their economy and therefore leads to an increase in the aggregate demand and unlike The New Classical perspective, The Keynesian aspect advocates for that “equilibrium level of output primarily depends on the level of aggregate demand in an economy”. So, as the model shows below, this would not affect the average price level as long as the economy is preforming below full employment.