2. Fighting the Great Depression
Keynes argued that the government
should fight the Great depression
through his system, called the
Keynesian Theory. This theory states
that in order for the government to be
successful, the government should
intervene. Another part of the theory is
that there should be a monetary policy,
which is a policy in which the decisions
made by a central bank which affects
the size of the amount of money. This
theory also says that the government
should intervene by making sure that
the business cycle flows as smoothly
as possible.
3. Franklin Ignores the theory
Originally, Franklin had ignored Keynes and his theory.
There are multiple reasons that were behind this
denial. One of these reasons included the fact that
Roosevelt knew that Keynes had a Bachelor's degree
in math, rather than having one in economics. Another
reason to this is because Keynes had not fully
developed his theory when he first met with Roosevelt.
Another reason as to why Roosevelt ignore the theory
is because there were so many numbers involved that
Roosevelt thought that he was a mathematician rather
than an economist.
4. Did it help the Great Depression
● Yes, the theory of Keynes helped the U.S. out
of the economy, but it was not the only thing
that helped the U.S. Keynes's book, The
General Theory of Employment, Interest, and
Money, he said that the Great Depression had
been caused by failure of aggregate demand.
After lots of debate, the government finally
decided that Keynes's Theory was the key out
of the Great Depression, and so they
increased their spending.
5. A Downside to Keynes's Theories
One of the major downsides to the Keynes's
theories is that it is mainly for periods of
recession rather than periods of economic
growth. What this means is that it is mainly a
good system to use during a recession, and it
would have no effect if it were to be used in a
growing economy. Another downside is that in
some cases, it can create a huge debt over a
long time period.
6. Explaining it in simple terms
Keynes's Theory basically says that in order for
people to be rich and happy, and not be poor
or sad, the government, or the leader of our
country, should help the people as much as
they can. The government should also create a
rule where important people decide on different
things, which helps the U.S.A. Become richer
and happier.
7. Using Keynes's theory in modern times
Keynes's theory can be implemented today
through many different actions. The first
action increases in the government spending
and investment. Another action would
include expanding so that there would be
more creation of jobs. This action would also
need investment in better forms of energy.
Another thing that the government can do is
increase the aggregate demand.
