Keynesian Economics

Examples of Keynesian Economics in the following topics:

• Fours Schools of Economic Thought: Classical, Marxian, Keynesian, and the Chicago School.

  • Mainstream modern economics can be broken down into four schools of economic thought: classical, Marxian, Keynesian, and the Chicago School.
  • Mainstream modern economics can be broken down into four schools of economic thought:
  • Classical economics, also called classical political economy, was the original form of mainstream economics in the 18th and 19th centuries.
  • Keynesian economics derives from John Maynard Keynes, and in particular his book, The General Theory of Employment, Interest and Money (1936), which ushered in contemporary macroeconomics as a distinct field.
  • A final school of economic thought, the Chicago School of economics, is best known for its free market advocacy and monetarist ideas.

• Fiscal Policy

  • Government spending is fully funded by tax revenue and overall the budget outcome has a neutral effect on the level of economic activity.
  • Governments use fiscal policy to influence the level of aggregate demand in the economy, in an effort to achieve economic objectives of price stability, full employment, and economic growth.
  • Keynesian Economics argues this method be used in times of recession or low economic activity as an essential tool for building the framework for strong economic growth and working towards full employment.
  • Keynesian theory posits that removing spending from the economy will reduce levels of aggregate demand and contract the economy, thus stabilizing prices.
  • Neoclassical economists generally emphasize crowding out while Keynesians argue that fiscal policy can still be effective especially in a liquidity trap where, they argue, crowding out is minimal.

• Deficit Spending, the Public Debt, and Policy Making

  • Deficit spending and public debt are controversial issues within economic policy debates.
  • One area with more common ground is corporate tax rates, where both parties have generally agreed that lower rates and fewer tax expenditures would align the U.S. more directly with foreign competitioIn addition to policies regarding revenue and spending, policies that encourage economic growth are the third major way to reduce deficits.
  • Economic growth offers the "win-win" scenario of higher employment, which increases tax revenue while reducing safety net expenditures for such things as unemployment compensation and food stamps.
  • Democrats typically advocate Keynesian economics, which involves additional government spending during an economic downturn.
  • Republicans typically advocate Supply-side economics, which involves tax cuts and deregulation to encourage the private sector to increase its spending and investment.

• The Nineteenth Century

  • Associated with industrialism and capitalism, the 19th century looms large in the history of economic policy and economic thought.
  • As the century most associated with industrialization and capitalism in the West, the 19th century looms large in the history of economic policy and economic thought.
  • It was an intellectual predecessor of what later became Keynesian economics in the 1930's.
  • In the 1860's, a revolution took place in economics.
  • It appeared in 1871 with Menger's Principles of Economics.

• The Election Year Budget

  • In general, Democrats favor the principles of Keynesian economics to encourage economic growth via a mixed economy of both private and public enterprise, a welfare state, and strong regulatory oversight.
  • Conversely, Republicans generally support applying the principles of either laissez-faire or supply-side economics to grow the economy via small government, low taxes, limited regulation, and free enterprise.
  • The Obama administration's 2012 budget request focused on reducing annual deficits to more sustainable levels by making certain cuts in spending while continuing to support areas that would promote long-term economic growth, such as education and clean energy.

• Business and Economic Interest Groups

  • Economic interest groups advocate for the economic benefit of their members, and business interests groups are a prominent type of economic interest group.
  • Economic interest groups are one of the five broad categories of interest groups in the US.
  • These groups advocate for the economic interest and benefits of their members.
  • Economic interest groups are varied, and for any given issue there will be a large number of competing interest groups.
  • Identify the organization and purpose of business and economic interest groups

• Economic Aid and Sanctions

  • States can give economic aid to help another country, or implement economic sanctions to try and force another country to change policies.
  • Economic sanctions are domestic penalties applied by one country or group of countries on another for a variety of reasons.
  • Economic sanctions include, but are not limited to, tariffs, trade barriers, import duties, and import or export quotas.
  • States can give economic aid to help another country's economic development.
  • Analyze criticisms of the institutions, practices and policies of economic aid

• Professional Interest Groups

  • Professional interest groups are another type of economic interest group.
  • Economic interest groups advocate for the economic benefit of their members and constituents.
  • These groups advocate for the economic interests of their members.
  • Professional organizations also provide direct economic benefits to their members.
  • However, it is also committed to advancing the interest of physicals, including economic interests.

• The Goals of Economic Policy

  • There are four major goals of economic policy: stable markets, economic prosperity, business development and protecting employment.
  • Economic policy refers to the actions that governments take in the economic field.
  • One of the major goals of economic policy is to promote economic growth.
  • The above image Rate of change of Gross domestic product, world and OECD, since 1961, is one representation of economic growth.
  • Compare and contrast the policy tools used by governments to achieve economic growth

• Economic Prosperity

  • Technological and industrial factors have also played a major role in the United States' economic prosperity .
  • Economic prosperity is a central component of any states' foreign policy.
  • Without substantial economic means, a state cannot expect to have influence on the world stage.
  • Similarly, economic prosperity is tied to the maintenance of a global military presence.
  • In 2008, a perfect storm of economic disasters hit the United States and indeed the entire world.