Basic Keynesian Theory
What is the main idea of Keynesian economics?
That government intervention stabilize the economy
What is fiscal policy?
The government's use of spending and taxation to influence the economy
Where and where was John Maynard Keynes born?
Cambridge, England in 1883
Who are the main critics of Keynesian economics?
People who believe in a free market
What is aggregate demand?
The total demand for goods and services in an economy at a given time
How does fiscal policy influence aggregate demand?
The government spending and taxation shift aggregate demand curves
What was Keynes’ major work on economics?
"The General Theory of Employment, Interest, and Money"
What is the main criticism of Keynesian stimulus during recessions
Potential inflation without necessarily boosting demand effectively
What does Keynesian theory suggest about government intervention during recessions?
The recommendation that the government should increase spending and lower taxes during economic downturns
What role does government spending play in Keynesian economics?
The role of increasing government spending to boost aggregate demand during a recession
What characterised the society he lived in?
There was a lot of progress and many were very poor
How did his thinking influence the welfare state?
What is the "multiplier effect" in Keynesian theory?
The concept that an increase in fiscal stimulus (government spending) can lead to a proportionally larger increase in GDP
What does Keynesian theory suggest about tax policy during economic downturns?
The Keynesian recommendation to lower taxes and increase government spending to stimulate economic activity during downturns
What is Keynes full name?
John Maynard Keynes
What was Keynes's response to the long-term effects of his policies?
The famous quote, "In the long run, we are all dead," suggesting Keynes was more concerned with solving short-term problems than the long-term consequences of policies
What is the idea that classical economics focuses on long-term self-regulation of markets, while Keynesian theory emphasizes short-term intervention?
The idea that classical economics focuses on long-term self-regulation of markets, while Keynesian theory emphasizes short-term intervention
How did Keynes's ideas influence post-World War II economies?
The widespread adoption of Keynesian policies in rebuilding and stabilizing war-torn economies through government intervention
How do his believes impact the world today?
The government is more prominent in societies and his thinking has been used during recessions.