1. In the Keynesian framework, which of the following events might cause a recession? Which might cause inflation?

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.