What the Keynesian multiplier effect does — $1 of government spending generates more than $1 of GDP

How does the concept of the Money Multiplier effect work in fractional reserve banking systems to amplify the money supply?

Money Multiplier = 1 / Reserve Ratio; banks lend fraction of deposits, increasing money supply

What Keynes argued about government spending during recessions

Keynes argued for increased government spending to stimulate demand during recessions

What raising interest rates does — makes borrowing more expensive, slows spending and inflation

Raising interest rates makes borrowing more expensive, slows spending, and reduces inflation

What stagflation is and why Keynesian economics struggled to explain it

Stagflation: simultaneous high inflation and stagnant growth, challenging Keynesian focus on demand management

What the Phillips curve shows — inverse relationship between unemployment and inflation

The Phillips curve illustrates the inverse relationship between unemployment and inflation rates

How does the Fisher Effect describe the relationship between nominal interest rates, real interest rates, and inflation, and what are the implications for monetary policy in a high inflation environment?

Fisher Effect: Nominal rate = Real rate + Inflation; high inflation necessitates higher nominal rates for policy effectiveness