John Maynard Keynes s Economic Theories Essay - 1245 Words

John Maynard Keynes was born in 1883 and passed in 1946. He was an economist, journalist and financier, known for his economic theories. The majority of his theories have to do with prolonged unemployment. He believed there would be no automatic self-adjustment and that the economy could stagnate in continuous unemployment or inflation. Keynes believed that the economy is susceptible to unexpected changes in spending behavior and won’t self-adjust to a desired macro equilibrium. When there are changing expectations Keynes believed that savings would increase and consumption would decrease causing gross domestic product to fall. This would create business outlook to be gloomy. Rather than the economy gravitating back to full employment, Keynes saw the economy getting more unstable when there is a change of expectations. When an economy is in a recession Keynes proposed that the government should buy more output, employ more people, provide more income transfers and make more mo ney available. Keynesian policy popularity changed significantly from the time of the Great Depression to today. During the time of the Great Depression, no one could figure out how to get people to keep spending, but then Keynes came along and suggested that the government must spend the money when all else fails. Keynesian policy was revolutionary during the time of the Great Depression because his idea of government spending is what got America out of the Depression. In the 1960s an idea developed,Show MoreRelatedJohn Maynard Keynes s Economic Theory And Policy After World War II1307 Words   |  6 Pagesemployment. John Maynard Keynes came up with a theory as a counterargument: that aggregate demand is the single most powerful force in any economy. 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