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Macroeconomics

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Moderate

ARA Long Run

MACRO-7N78AG

In 2008 the United States fell into a major recession. There was a debate in Congress as to whether or not they should have responded to the recession.

If Congress had chosen to not enact any policy, in the absence of any additional shocks, the Keynesian model would have predicted that eventually (i.e. in the long run) output would

, prices levels would

, and interest rates would

.