See Article History John Maynard Keynes, born June 5,CambridgeCambridgeshireEngland—died April 21,Firle, SussexEnglish economist, journalist, and financier, best known for his economic theories Keynesian economics on the causes of prolonged unemployment. His most important workThe General Theory of Employment, Interest and Money —36advocated a remedy for economic recession based on a government-sponsored policy of full employment. Background and early career Keynes was born into a moderately prosperous family.
His mother, one of the first female graduates of Cambridge University, was active in charitable works for less-privileged people. Keynes' father was an advocate of laissez-faire economicsand during his time at Cambridge, Keynes himself was a conventional believer in the principles of the free market.
However, Keynes became comparatively more radical later in life and began advocating for government intervention as a way to curb unemployment and resulting recessions. He argued that a government jobs program, increased government spending, and an increase in the budget deficit would decrease high unemployment rates.
Principles of Keynesian Economics The most basic principle of Keynesian economics is that if an economy's investment exceeds its savings, it will cause inflation.
Conversely, if an economy's saving is higher than its investment, it will cause a recession. This was the basis of Keynes belief that an increase in spending would, in fact, decrease unemployment and help economic recovery. Keynesian economics also advocates that it's actually demand that drives production and not supply.
In Keynes time, the opposite was believed to be true. With this in mind, Keynesian economics argues that economies are boosted when there is a healthy amount of output driven by sufficient amounts of economic expenditures. Keynes believed that unemployment was caused by a lack of expenditures within an economy, which decreased aggregate demand.
Continuous decreases in spending during a recession result in further decreases in demand, which in turn incites higher unemployment rates, which results in even less spending as the amount of unemployed people increases.
Keynes advocated that the best way to pull an economy out of a recession is for the government to borrow money and increase demand by infusing the economy with capital to spend.
This means that Keynesian economics is a sharp contrast to laissez-faire in that it believes in government intervention.2. According to Keynesian theory, changes in aggregate demand, whether anticipated or unanticipated, have their greatest short-run effect on real output and employment, not on prices.
Little of Keynes’s original work survives in modern economic theory. His ideas have been endlessly revised, expanded, and critiqued.
In The General Theory Keynes provided what was both an intellectual and a policy-prescriptive alternative to the dismal views of the traditionalists and the Marxists. His analysis made the events of and after the result of systemic rather than accidental factors. He shifted the focus of economic analysis from problems of resource allocation to those of the determination of aggregate demand. Economics, Keynesian BIBLIOGRAPHY  Keynesian economics  is the approach to macroeconomics that grew out of John Maynard Keynes’s work, especially his The General Theory of Employment, Interest and Money () written during the Great Depression . John Maynard Keynes, 1st Baron Keynes of Tilton (5 June – 21 April ) was a British economist whose ideas, known as Keynesian economics, had a major impact on modern economic and political theory and on many governments' fiscal policies.. See also: The General Theory of Employment, Interest and Money.
Keynesian economics today, while having its roots in The General Theory, is chiefly the product of work by subsequent economists including john hicks, james tobin, paul samuelson, Alan Blinder, robert solow.
John Maynard Keynes, 1st Baron Keynes of Tilton (5 June – 21 April ) was a British economist whose ideas, known as Keynesian economics, had a major impact on modern economic and political theory and on many governments' fiscal policies..
See also: The General Theory of Employment, Interest and Money. Keynesian Economics is an economic theory of total spending in the economy and its effects on output and inflation developed by John Maynard Keynes. In economics Keynesian economics, also Keynesianism and Keynesian Theory, is based on the ideas of twentieth-century British economist John Maynard pfmlures.coming to Keynesian economics the public sector, or the state, can stimulate economic growth and improve stability in the private sector—through, for example, interest rates, taxation, and public projects.
K eynesian economics is a theory of total spending in the economy (called aggregate demand) and its effects on output and inflation. Although the term has been used (and abused) to describe many things over the years, six principal tenets seem central to Keynesianism.