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Keynes |
Keynes argued that the solution to depression was to stimulate the economy ("inducement to invest") through some combination of two approaches : a reduction in interest rates. Government investment in infrastructure – the injection of income results in more spending in the general economy, which in turn stimulates more production and investment involving still more income and spending and so forth. The initial stimulation starts a cascade of events, whose total increase in economic activity is a multiple of the original investment |
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Keynes |
Keynesian economics is an economic theory named after John Maynard Keynes, a British economist who lived from 1883 to 1946. He is most well-known for his simple explanation for the cause of the Great Depression. His economic theory was based on a circular flow of money, which refers to the idea that when spending increases in an economy, earnings also increase, which can lead to even more spending and earnings. Keynes’ ideas spawned numerous interventionist economic policies during the Great Depression. |
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Keynes |
the government should step in to increase spending, either by increasing the money supply or by actually buying things itself. |
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Keynes |
The British economist John Maynard Keynes believed that the government could pull the economy out of a depression by increasing government spending, thus creating jobs and increasing consumer buying power. |
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Keynes |
"If, however, a government refrains from regulations and allows matters to eat their course, crucial commodities soon gain a level of price out from the achieve of all but the rich, the worthlessness from the cash becomes apparent, and also the fraud upon the public is also concealed no longer." |
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Keynes |
Keynes knew that to recover as soon as possible, the government had to intervene and put a decrease on taxes along with an increase in spending |
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Keynes |
government need to only play a role in stimulating the economy instead of running it and having total control. Focus more on the economy less on the government power. |
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Keynes |
Keynesians, however, believe that prices and wages are not so flexible. They believe that prices and wages are sticky, especially downward. The stickiness of prices and wages in the downward direction prevents the economy’s resources from being fully employed and thereby prevents the economy from returning to the natural level of real GDP. Thus, the Keynesian theory is a rejection of Say’s Law and the notion that the economy is self-regulating. |
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Keynes |
Fiscal Policy-In economics and political science, fiscal policy is the use of government revenue collection (taxation) and expenditure (spending) to influence the economy.- One of Keynes Solutions |
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