Final answer:
The Keynesian model associates cyclical behavior with average labor productivity, suggesting it may decrease in economic downturns due to wage and price rigidity and the focus on aggregate demand.
Step-by-step explanation:
The Keynesian model predicts that during an economic downturn, average labor productivity may decrease as firms retain more workers than needed due to wage and price rigidity, prompted by the importance of aggregate demand. In this view, movements in productivity are tied to the business cycle, where productivity falls during recessions and rises during expansions as businesses adjust labor in response to changing demand.
The focus on short-run adjustments can potentially overlook long-term factors influencing productivity, such as technological advancements and workforce education, which are more emphasized in the neoclassical model that focuses on aggregate supply.
During periods of economic expansion, aggregate demand increases, leading to increased production and higher labor productivity. Conversely, during recessions, aggregate demand decreases, resulting in reduced production and lower labor productivity.