Keynesian economics Levii Valeria EMREI-142 Istoria Gindirii

Keynesian economics Levii Valeria EMREI-142 Istoria Gindirii

Biography. ¡ ¡ ¡ British economist Born in June 1883 ¡ Wrote “ The General Theory of Employment, Interest and Money” He’s known as the Father of Macroeconomics

Major Achievements ¡ Helped in the economy’s recovery during the Great Depression ¡ Influenced the general economic boom by Western Nations between 1945 -1975 ¡ Formed the basis of Keynesian economics ¡ ¡ Introduced the Macroeconomics theory He believed that government spending could pull an economy out of recession

The Great Depression ¡ ¡ Period of high rates of unemployment He advocated interventionist economic policy Urged government to : * use financial and monetary measures to reduce the adverse effects of business cycles, economic recession and depressions ¡ ¡ Spend on public works like programs to promote employment

Business cycle during the great depression. ¡ He outlined the limitations of Microeconomics* theory. Due to unemployment and poverty, the demand for good and services dropped. Many workers were unwilling to accept lower wages.

Intro to Macroeconomics Theory. ¡ ¡ High unemployment rate greatly influenced the development of macroeconomics Challenged the established neoclassical economics ¡ Introduced important concepts such as : *consumption * multiplier * marginal efficiency of capital * liquidity preference ¡ Government ‘s responsibility is to *reach and maintain full employment * regulate markets and free trade

Keynesian economics impact Aid in the formation of the 20 th Century’s economy ¡ Consequences of the Great Depression were lessened ¡ Government took an active role in the country’s economy (Departure from neoclassical theories ) ¡

Why did the Keynesian theory didn’t work? ¡ Government spend too much money on post – WWII events (ex. Vietnam war, sending the first man to the moon). ¡ The Keynesian solution stopped working ¡ Unemployment became worst ¡ ¡ It created Inflation In conclusion Keynesian theories work best on economics catastrophes

Keynesian economics nowadays New stimulus Bill package ¡ President Obama’s plan to save the U. S. economy with a massive round of government spending was based on Keynes’ ideas. ¡