Essay on john maynard keynes

Submitted By kemamjomeh
Words: 366
Pages: 2

Keynes theory’s are used in many governments such as Australia, Britain, Canada, parts of Europe and of course the United states, but his ideas took an unorthodox path, a path that many economists never thought about taking. In 1920 he created the “Quantity theory of money” which is now called monetarism which means “the theory of practice of controlling the supply of money as the chief method of stabilizing the economy.” Keynes writing of this topic was built around the beliefs he had learned from his mentors Marshal and Pigou. Which led him to write two famous books on Monetary policy. He believed that the way to stabilize the economy is to stabilize the price level and to do that the government Central Bank must lower interest rates when prices rise and raise them when prices fall. Due to the Great depression when Britain’s unemployment reached up to 20 percent Keynes researched other reasons for Britain’s economic crisis and figured out that the “General Theory of Employment, interest and Money” was the problem. Keynes General Theory was much different that what other economists believed and in many ways started a new way economists think and looked at the economy. The General Theory is stating that to get out of economic downturns, you have to spend money by increasing aggregate demand, including spending on public works. Keynes also believed that consumers had so little buying power in such a large market, that they could not possibly be the cause for economic booms