Learning Journal unit 5.docx - Although not explicitly...

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Although not explicitly mentioned in Chapter 20, John Maynard Keynes is considered a foundational source in the understanding of macroeconomics. After performing research outside the textbook, please explain in three well-structured paragraphs the basic principles of the New Keynesian Economics and how it addresses perceived limitations to classic Keynesian theory. The Keynesian theory was raised by John Maynard Keynes, a British economist who studied all the factors of production that make up the economy of a country, such as investment, consumption, demand, saving, and public spending. Keynesianism is based on government intervention, supporting economic policy as the best tool to get out of an economic crisis regardless of whether the resources come from the country's Gross Domestic Product (GDP) or from the issuance of foreign debt. Its economic principles consist of increasing public expenditures to stimulate aggregate demand and thus increase production, investment, and employment. In this theory, the decrease in demand is due to the

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