John M Keynes Presentation


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John M Keynes Presentation

  1. 1. “Ideas shape the course of history”
  2. 2. Biography  Britisheconomist  Born on June 1883  Wrote “The General Theory of Employment, Interest and Money” during WWII  He’s known as the Father of Macroeconomics
  3. 3. 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 Macroecomics theory ◦ He believed that government spending could pull an economy out of recession
  4. 4. The Great Depression o Period of high rates of unemployment o He advocated interventionist economic policy o Urged government to: o use financial and monetary measures to reduce the adverse effects of business cycles, economic recessions, and depressions o Spend on public works like programs to promote employment
  5. 5. 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 *Studies the individual parts of economy, the household and the firms, make decisions to allocate limited resources. How good or services are bought and sold.
  6. 6.  High unemployment rate greatly influenced the development of macroeconomics  Challenged the established neoclassical economics  Introduced important concepts such as: o Consumption o Multiplier o Marginal efficiency of capital o Liquidity preference END OF  Government's responsibility is to NEOCLASSICAL ◦ Reach and maintain full employment THEORIES! ◦ Regulate markets and free trade such as Laissez-faire
  7. 7. Keynesian Economics Impact  Aid in the formation of the 20th Century’s economy  Consequences of the Great Depression were lessened  Government took an active role in the country's economy (Departure from neoclassical theories)
  8. 8. Why did the Keynesian theory didn't work?  Government spend too much money on post-WWII events. Examples: 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
  9. 9. 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
  10. 10. Bibliography  Ryan, James John Maynard Keynes John Maynard Keynes; 2005, p1-2, 2p  Columbia Electronic Encyclopedia, 6th Edition; 10/1/2009, p1-1, 1p. See Keynes’s Collected Writings (30 vol., 1971–80) Biography by R. Skidelsky (3 vol., 1986–2001); G. Fletcher, the Keynesian Revolution and Its Critics (1987); P. Clarke, The Keynesian Revolution in the Making, 1924–1936 (1989).  NPR story: Davidson, Adam and Blumberg, Alex report was produced in collaboration with Chicago Public Radio's This American Life, Obama Gives Keynes His First Real-World Test, 2009  Keynes, John M., The General Theory of Investment, Interest and Money 1936  Lawler, JosephThe American Spectator, We’re All Keynesian Again, 2009