John Maynard Keynes
... John Keynes: Other Views and Perspectives
• Believed an interconnected global economy needed all countries
to have strong economies: not a mix of strong and weak.
• Argued at the Treaty of Versailles that Germany should not be
forced to make war reparations, as this would prevent Germany’s
... policy actions by the central bank and fiscal
policy actions by the government to stabilize
output over the business cycle.The theories
forming the basis of Keynesian economics were
first presented in The General Theory of
Employment, Interest and Money, published in
1936. The interpretations of Key ...
A SUMMARY OF THE HISTORY OF ECONOMIC THEORIES Mgt. 704
... economics to explain the Great Depression.
• He created the field of macroeconomics by viewing the economy in
terms of aggregates rather than as a sum of markets.
– Prices could be sticky so that aggregate demand determined aggregate
supply and there was no reason to expect that aggregate demand
Aggregate demand (AD) is the total planned or desired spending
... • Invisible hand was a concept introduced by Adam Smith
in 1776 to describe the paradox of laissez-faire market
economy. The invisible hand doctrine holds that, with
each participant pursuing his or her own private interest,
a market system nevertheless works to the benefits of all
as though a benev ...
The Enduring Legacy Of John Maynard Keynes
... the Federal Reserve Bank Governor became the executioner through incredible repo rate
hike. From the heady pedestal of an infallible economist Keynes became a pariah in
economics with Macro Economics being divided into two great factions viz. Salt Water
Economics who are essentially Keynesians and F ...
Economics - Klein Oak.org
... 35. ______ was the author of The General Theory
of Employment, Interest, and Money.
36. According to Keynes, _______ must take
action to ensure the proper level of aggregate
5. Approaches to policy and macroeconomic context
... Keynes shifted macroeconomic thought from a focus on AS to AD. Keynesian
economists emphasise the use of demand-side policies, fiscal and monetary, to close
gaps between actual and potential output. The 2008 financial crisis caused an
increase in popularity of Keynesian beliefs.
Keynesians believe t ...
Keynes vs. Hayek Notes
... • Recessions and depressions can occur from too
little aggregate demand for goods and services
• Inflation can occur because of too much demand
for goods and services
• Government can influence economic activity by
influencing aggregate demand through fiscal
and monetary policies
• Fiscal policy (c ...
... • The self-correcting mechanisms of falling interest rates and falling prices and
wages might be insufficient to push investment and consumption back up
again so it is necessary for the government to intervene by spending money.
... Great Depression and Before
Why did aggregate demand decline so much
during this period?
Stock market crash of 1929
Grim business expectations
Drop in consumer spending
Widespread bank failures
Severe restrictions on world trade
economists and economic theories
... 1. President Hoover (≈early 1930’s)
2. President Carter (≈late 1970’s)
3. President Bush Sr. (≈early 1990s)
~Keep this in mind when we learn about
different economists and their theories~
Keynesian economics (/ˈkeɪnziən/ KAYN-zee-ən; or Keynesianism) is the view that in the short run, especially during recessions, economic output is strongly influenced by aggregate demand (total spending in the economy). In the Keynesian view, aggregate demand does not necessarily equal the productive capacity of the economy; instead, it is influenced by a host of factors and sometimes behaves erratically, affecting production, employment, and inflation.The theories forming the basis of Keynesian economics were first presented by the British economist John Maynard Keynes in his book, The General Theory of Employment, Interest and Money, published in 1936, during the Great Depression. Keynes contrasted his approach to the aggregate supply-focused 'classical' economics that preceded his book. The interpretations of Keynes that followed are contentious and several schools of economic thought claim his legacy.Keynesian economists often argue that private sector decisions sometimes lead to inefficient macroeconomic outcomes which require active policy responses by the public sector, in particular, monetary policy actions by the central bank and fiscal policy actions by the government, in order to stabilize output over the business cycle. Keynesian economics advocates a mixed economy – predominantly private sector, but with a role for government intervention during recessions.Keynesian economics served as the standard economic model in the developed nations during the later part of the Great Depression, World War II, and the post-war economic expansion (1945–1973), though it lost some influence following the oil shock and resulting stagflation of the 1970s. The advent of the financial crisis of 2007–08 has caused a resurgence in Keynesian thought.