In the Keynesian model,in a depression

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In the Keynesian model, a depression is characterized by a situation where the economy operates in the horizontal range of the aggregate supply (AS) curve. This means that as demand decreases, output and employment decrease but prices and wages remain sticky, which creates a situation of excess supply in the goods and labor market. Therefore, the only way to increase output and employment is through expansionary fiscal policy, such as increasing government spending or decreasing taxes. The interest rate does not play a significant role in this model because it is assumed to be already near zero.

In the Keynesian Model,in a Depression