The Keynesian model and the AD/AS model are similar in many ways and different in many ways.
A. What are the characteristics of an economy in which the Keynesian model will provide a good estimate of the result of an increase in autonomous expenditures? What are the characteristics of an economy in which the Keynesian model will provide a poor estimate of the result of an increase in autonomous expenditure?
B. Show, in a few diagrams, how the slope of the AS curve affects the accuracy of the Keynesian model’s predictions about the results of an increase in autonomous expenditures.