Keynesian+Economics

=KEYNESIAN ECONOMICS=

Keynesian economics, also referred to as Keynesianism and Keynesian theory, is an economic theory developed by John Maynard Keynes. Keynesian Economics was adopted by many societies post World War II and continues to have a great effect on our societies.

John Maynard Keynes (5 June 1883– 21 April 1946) was a British economist who developed Keynesian Economics as a result of studying business cycles and the monetary effects of recessions.The theory of Keynesian Economics was first published in //The General Theory of Employment, Interest and Money//. Keynes was also a fundamental member of the Fabian Society founded in 1884 in London, England.

=**THE CONCEPT OF KEYNES' THEORY**=

Keynesian economics is a myriad of economic thoughts and theories based on the performance, structure, behavior, and decision making of the whole economy, and these theories derived from British economist John Maynard Keynes. The main idea behind Keynes’ economic theory is based on a circular flow of money: when spending increases, earnings also increase; and this can lead to even more spending and earning. A supporter of Keynesian economics would confidently state that it is the government’s role in society to smooth out the bumps in business cycles. Active government intervention in the marketplace and monetary policy is the best method of ensuring growth and prosperity in the economic world.

This school of thought is opposed to the practice of too much saving and not enough consumption in an economy. It advocates considerable redistribution of wealth whenever it is deemed necessary. The government, according to Keynes, should regulate demand by manipulating the supply of money available to producers and consumers. This application of monetary and fiscal policy would decrease the likelihood of both inflation and recession to occur in the economy and would still leave the free-market system undamaged. Keynes’s theory eventually became known as “demand-side economics” as he stated that, even in a liberal democratic society, the government could and should take a big part in securing all citizens from the risk of economic uncertainty.

Keynes suggested that government intervention should increase in order to decrease the severity of a recession. Governments should be spending money on public programs or infrastructure while lowering taxes as well. This would leave citizens with more money to spend and invest back into the economy instead of saving. During good economic times, Keynes believed governments should be reducing spending and increasing taxes. This would create a steady economy, getting rid of a big boom, and saving money for bad times.

The first noticeable practice of Keynesian economics was through the New Deal, established by Franklin D. Roosevelt, former president of the United States from 1933 to 1945. The programs of this establishment worked to provide emergency relief, reinforce agriculture and the economy, and reform the banking system. This new approach toward the role of the government in the economy epitomized the beginning of the shift to a mixed economy, where free-market principles are combined with a reasonable margin of government intervention. Keynes' theories also played a great role in the Bretton Woods Agreement after World War II. Keynes called for the rise of a welfare state after The Great Depression, encouraging government intervention to counter market imperfections.

Keynes's theories challenged classic liberalism. According to Keynes, government intervention is fundamental to maintain a steady economy.



**REFERENCES**
Fielding, J., Chistison, M., Harding, C., Meston, J., Smith, T., & Zook, D. (2009). //Perspectives on Ideology//. Don Mills, Ont.: Oxford University Press. John Maynard Keynes. (n.d.). //John Maynard Keynes//. Retrieved March 4, 2012, from www.maynardkeynes.org/

John Maynard Keynes - Wikipedia, the free encyclopedia. (n.d.). //Wikipedia, the free encyclopedia//. Retrieved March 4, 2012, from http://en.wikipedia.org/wiki/John_Maynard_Keynes

Keynesian Economics. (n.d.).//Wikipedia//. Retrieved March 4, 2012, from en.wikipedia.org/wiki/Keynesian_economics "Keynesian Economics." Investopedia. Web. 06 Mar. 2012. < [|http://www.investopedia.com/terms/k/keynesianeconomics.as] >.

Rhodes, Celie, and Lucy Oppenheimer. "What Is Keynesian Economics?" WiseGeek. Conjecture, 02 Mar. 2012. Web. 06 Mar. 2012. < [] >

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