Keynesian Economics



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Keynesian's economic theories had been rejected by leaders and opposed by other economists more than it should, despite having been proven effective.

Keynesian’s theory for maintaining a prosperous economy has to do with government’s increased expenditure during recessions and cuts to expending during prosperity and inflation. The government can control the supply of money by raising taxes, interest rates, and decreasing spending on social programs during prosperity to save money, and perform the opposite during economic slowdowns to help stimulate the economy again. [1]

However, governments failed to save up money during the prosperous times, and were forced to go into debt when recessions hit. His theories were difficult for governments to put into practice, and thus contributed to the debts and stagflations in the 1970s, as well as stimulated economists to look towards more right-winged economic thinking. [2]


Reference
  1. "Evolution of Modern Liberalism." Perspectives on ideology. Edmonton, Alta.: Alberta Education, 2010. 208-210.
  2. "Regarding the Ongoing Irrelevance of Keynesian Economics" ALAS! Blog. 18 Mar 2012. <http://www.amptoons.com/blog/2009/11/03/regarding-the-ongoing-irrelevance-of-keynesian-economics/>