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Econ 2DO3Assignment #2John Maynard Keynes(a) Main contributionJohn Maynard Keynes was a British economist best known forspearheading the revolution in economic thinking. His majorcontribution to the world of economics is the Keynesian theory ofeconomics which claims that productive activity is controlled by theaggregate demand. His ideas have overwhelmingly affected theconcept and practice of contemporary macroeconomics, and
informed the economic policies of administrations. He is writingdefinitive works explaining how competitive markets functioned,how businesses operated, and how individuals spent theirincomes. (b)How it shaped economic analysis?Keynes stated that if Investment exceeds saving, there will beinflation. If saving exceeds Investment there will be recession. Oneimplication of this is that, in the midst of an economic depression,the correct course of action should be to encourage spending anddiscourage saving. This runs contrary to the prevailing wisdom,which says that thrift is required in hard times. In Keynes's words,