1. In the Keynesian framework, which of the following events might cause a recession? Which might cause inflation?
Explain your answers using Aggregate Demand/Aggregate Supply.
A large increase the price of the homes that people own.
Rapid growth in the economy of a major trading partner.
The development of a major new technology offers profitable opportunities for business.
The interest rate rises.
The good imported from a major trading partner become much less expensive.