Current location - Education and Training Encyclopedia - Resume - Why does Keynesianism lead to stagflation?
Why does Keynesianism lead to stagflation?
In Keynesian economics, the reason is that the change of total supply and total demand in the economy has led to the movement of price level. In monetarist economics, the cause is: when the currency circulation in the market increases, people's monetary income increases and their purchasing power decreases, thus affecting the rise of prices and causing inflation. This theory is summed up in a very famous equation: MV=PT.