FACULTY OF BUSINESS

PROFESSIONAL SCHOOL OF
ACCOUNTING

Report Title

The Keynesian model of a closed economy. The Interest

Rate and the goods market.

AUTHOR(S):

Farceque Vasquez Adeli Anaceli

Chavez Julón Jhuliza

Garcia Gonzales, Gilber Omar

Julon Zamora, Maria Celeni

Perales Guevara, Noe

ADVISOR(ES):

Padilla Hidalgo, José

Moyobamba - Peru

2024
INDICE

I. Introduction
II. Keynesian Model Of Closed Economy

III. Goods Market

IV. Money Market

V. Reference
 I. INTRODUCTION
The Keynes, or Keynesian, model is an economic theory enunciated in
the 20th century by an important British economist: John Maynard Keynes. He
is an economist who dedicated most of his extensive work to understanding
financial crises.
If three ideas are to be highlighted that describe Keynes's work, they
could be the following:
1. He thought that economic policy was the key tool to get a country out
of the crisis.
2. His idea was that governments should try to stimulate the demand in
the economy.
3. The best way to stimulate demand would be to use fiscal policy, the
public deficit.

John Maynard Keynes was born in the British city of Cambridge,

well known for hosting the famous university, which was also the first in
the world to offer Economics among its degrees and where Keynes was
first a student and later a professor. He dedicated his career to studying
aggregate problems, such as employment, unemployment, consumption,
production, savings or investment of a country as a whole. It understands
that these phenomena, and the relationships between them, are
governed by their own rules, not necessarily derived from the study of
how individuals think and decide. What Keynes was truly concerned
about was what happened in the short term.

Markets for goods and services are the place where the exchange
of products and services between buyers and sellers takes place. These
markets are fundamental to the economy, as they allow for the efficient
allocation of resources and the determination of prices.

Markets for goods and services are fundamental to the economy,

as they allow the exchange of products and services between buyers
and sellers. These markets are governed by the law of supply and
demand, which determines the price and quantity of goods and services
that will be exchanged.
 II. KEYNESIAN MODEL OF CLOSED ECONOMY
The Keynesian model is widely accepted as the formalization of what
Keynes had in mind when he wrote his famous General Theory in 1936 and
which marks the beginning of the study of macroeconomics. Underpinned by
this theory is the idea that economies often have unused capacity, with many
unused resources. Consequently, it is assumed that prices are given, and any
demand pressure will result in an increase in quantity and not in prices. That is,
to use this model as a global description of the economy it is implicitly assumed
that aggregate supply is horizontal. In practice, one can interpret this
assumption as that the responses of quantities to changes in aggregate
demand are more important than those of prices.

III. GOODS MARKET

The goods and services market is where all types of goods such as
clothing, food, appliances, etc. are bought and sold. and services such as
health, educational, aesthetic services, etc. To begin with, let's clarify that the
study and behavior of the market for goods and services corresponds to the
field of macroeconomics. Macroeconomics fundamentally studies the behavior
and interrelation of three important markets. The market of goods and services,
the money market and the labor market (Quiroa, 2020).
IV. MONEY MARKET
Money markets, which are also called monetary markets, constitute a set
of markets specialized in large-scale transactions, where short-term financial
assets (with maturities of up to 18 months) are traded. These markets are
characterized by presenting levels of risk very low and high liquidity (W & K,
2021).
Main Features:

● Short Terms: Financial assets in the money market have

short terms, meaning that they mature in a relatively short period of time,
generally less than a year.

● Low Risk: The instruments traded in this market are

usually low risk, which makes them safe options for investors and
participants.

● High Liquidity: Liquidity is a distinctive characteristic of the

money market. The assets are easily convertible into cash without
significantly affecting their value.
 V. REFERENCE

Quiroa, M. (2020, November 1). Market of goods and services.

Economipedia. https://economipedia.com/definiciones/mercado-de-bienes-
y-servicios.html
W & K, R. garedo. (2021, April 26). Money markets: What they are, concepts
and general characteristics – WK Financial Education – MiFID II Qualification.
https://wkfinancialeducation.com/mercados-monetarios-que-son-y-
caracteristicas/
Martínez Cal, R. M. (2023). Introducción a la Economía.
https://repositorio.comillas.edu/xmlui/bitstream/handle/11531/80978/Gu
%C3%ADa%20Docente.pdf?sequence=1
Velázquez Orihuela, D. (2023). Distribución y crecimiento en economías
abiertas.
http://www.scielo.org.co/scielo.php?pid=S0120-
30532023000100017&script=sci_arttext
Ricardo, D. (2023). Principios de economía política y tributación.
https://www.torrossa.com/it/resources/an/5654233