Contribution of Keynes from Franz Li

Contribution of Keynes from Franz Li - the depression As...

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Contribution of Keynes Considered the father of economics, John Maynard Keynes had a great deal of influence in economics. Keynes' theories on government intervention and moderation of the economy helped to achieve the end of the Great Depression. Up until the Great Depression the United States used the “classical” or “conservative” version of capitalism. This version stated that the economy was self-correcting and was best left untouched. The depression brought a marker decline in the economy and many individuals to search and unveil a new version of capitalism. In 1936, Keynes published a book explaining his views on the economy and how the economy could be restored. Unlike the classical version of economics, Keynes believed that the aggregate of demand was unstable. He thought that an increase in the aggregate demand, and an expansionary fiscal policy to deal with problems which may arise, would bring the United States economy out of
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Unformatted text preview: the depression. As the aggregate demand increases the price level falls, influencing people to buy more at lower prices and an increase in the amount of goods and services demanded. This would ultimately result in a government budget deficit where the total government expenditures exceed the total government revenues. By shifting the aggregate demand, the equilibrium level of aggregate output and employment would rise. Keynesian economics ultimately brought the nation out of the Great Depression. It encouraged full employment and price stability. Reference: “John Maynard Keynes” Retrieved October 21, 2007, from HISTORY OF ECONOMIC THOUGHT: “A review of Keynesian theory” Retrieved October 21, 2007, from CAUSES OF THE GREAT DEPRESSION:
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This note was uploaded on 01/11/2012 for the course ECONOMICS 1010 taught by Professor Aandan during the Spring '10 term at York University.

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