The traditional Keynesian approach to fiscal policy differs in three ways from that is presented in the Fiscal Policy

The traditional Keynesian approach to fiscal policy differs in three ways from that is presented in the Fiscal Policy Chapter in your textbook.

1. It emphasizes the underpinnings of the components of aggregate demand.


2. It assumes that governement expenditures are not substitutes for private expenditures and that current taxes are the taxes taken into account by consumers and firms.


3. The traditional Keynesain approach focuses on the short run and so assumes that as a first approximation, the price level is constant (no inflation or deflation of prices).
   
   
   
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