keynes1 - The Economics of Keynes The The Keynesian System...

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The Economics of Keynes The Economics of Keynes The Keynesian System (I): The Role of Aggregate Demand
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2 Great Depression (1) Great Depression (1) Year U.S. Unemployment Rate 1929 3.2% 1930 8.7% 1931 15.9% 1932 23.6% 1933 24.9% 1939 17.2%
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3 Great Depression (2) Great Depression (2) General Conditions GNP fell 30% from 1929-1933 Gov’t Tax Revenues fell 50% Hoover raised highest marg. tax rates from 25% to 63%, making the 2.5 times higher! By 1933, machine tool orders were 1/8 their 1929 level More than 9,000 banks closed Factories and mines were closed down, towns went bankrupt and were abandoned
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4 Great Depression (3) Great Depression (3) Prices GNP Deflator fell 24% from 1929-1933 Farm Product Prices fell 50% Crude oil was 5 cents per barrel Financial Markets Interest Rates fell Equivalent Dow Jones Average = 300
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5 Keynes Keynes I believe myself to be writing a book on I believe myself to be writing a book on economic theory which will largely economic theory which will largely revolutionize revolutionize not, I suppose, at once not, I suppose, at once but in the course of the next ten years but in the course of the next ten years the way the world thinks about economic the way the world thinks about economic problems.” problems.” -- John Maynard Keynes -- John Maynard Keynes
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6 The Early J. M. Keynes The Early J. M. Keynes Born in 1883 in Cambridge, England Son of John Neville Keynes Neville was a professor of Economics and Logic at Cambridge Univ., and wrote on Economic Methodology Won a scholarship to Eton Boy Genius Won prizes for his work in the classics, mathematics, history, English essays Wrote papers on contemporary social problems, participated in crew and debate, acted, read everything Became an expert in medieval latin poetry Part of Eton’s social elite Won a scholarship to King’s College, Cambridge
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7 Keynes as a College Student Keynes as a College Student President of the Student Union President of the University Liberal Club Rowed, studied philosophy, played bridge,
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keynes1 - The Economics of Keynes The The Keynesian System...

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