Keynesian.docx - Although not explicitly mentioned in...

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Although not explicitly mentioned in Chapter 20, John Maynard Keynes is considereda foundational source in the understanding of macroeconomics. After performing research outside the textbook, please explain in three well-structured paragraphs the basic principles of theNew Keynesian Economicsand how it addresses perceived limitations to classic Keynesian theory.New Keynesian (or Neo-Keynesian) builds upon the classical Keynesian theory of macroeconomics. To start with, Keynesian or Classical Keynesian was developed by John Maynard Keynes during the times of the Great Depression (around 1930s). As per Investopedia, Staff, I. (2018, March 28), Keynesian theory is a way of looking at the effects on output and inflation from the total spending in the economy. Keynes had promoted the government to increase spending, plus lowering taxes, in order to encourage demand which will eventually pull the global economy out of recession. He believed that the aggregate demand can be promoted by the government through economic intervention policies and activist stabilization. This focuses

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