IDs for Midterm Exam - NAMES AND CONCEPTS Keynesian...

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NAMES AND CONCEPTS Keynesian Economics wrote General Theory in 1926 supported greater regulation of the economy, in direct contrast to laissez faire economics/market fundamentalism. theory states that general macro-level trends can overwhelm micro-level behavior of individuals. Instead of the economic process being based on continuous improvements in potential output, as most classical economists had believed from the late 1700’s on, Keynes asserted the importance of aggregate demand for goods as the driving factor of the economy, especially in periods of downturn. From this he argued that government policies could be used to promote demand at a macro level, to fight high unemployment and deflation of the sort seen during the 1930’s . President FDR adopted this vision, implementing the largest welfare state, including unemployment and health insurance, which the U.S. had never seen. FDR also implemented industrial relation reforms, which took ideas from Keynes. Keynes’ ideas also spread to Europe. After WWII, most economies were coordinated economies, which took ideas from Keynes. IMF Model Background: One of three (other two are the WTO and the G-7 World Economic Forum) organizations that make up the “Washington Consensus” which broke down during the late 1990s and especially after 9/11. The IMF was founded in 1944. The IMF manages monetary stability, exchange rates, conditional loans, World Bank investment, loans, and aid packages. These are all considered “Bretton Woods” institutions. Critiques of: Scott and Stiglitz argue that these institutions (United Nations included) no longer work, they may have fifty years ago in Western economies, but the mission has since changed and exists in a different world. IMF’s changed role: In 1971, Presiden Nixon detached the exchange rate from the dollar, he said the dollar could no longer back up the price of gold. Since then, currencies have fluctuated much more, thus, the IMF’s role has changed to more actively intervening in troubled economies. IMF offers SAP. IMF usually helps developing countries but has also helped England and Italy. The policies are based on The Washington Consensus, Neoliberalism, and Market Fundamentalism. The policies assume that pushing open markets and open markets’ requirements is the best way for countries to get out of currency problems. Wangari Maathai: Kenyan Woman Nobel Peace Prize Winner 1977 Greenbelt Movement ---organized poor women to plant millions of trees in Kenya, o Social movement-empowered women to challenge totalitarian Kenyan government; improved lives of women o Environmental Movement –replenished forest, fought pollution o Economic Movement -stimulated the economy, developed resources o Helped transition government from authoritarian to a democratic one
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o Addressed large problem of desertification in Kenya Market Fundamentalism Aka economic liberalism/laissez-faire capitalism/invisible hand
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IDs for Midterm Exam - NAMES AND CONCEPTS Keynesian...

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