Keynesian, Monetarist, Fiscal Policy, Unemployment, Inflation

The expression "Keynesian economics" was utilized to allude to the idea that ideal monetary execution could be accomplished and financial droops avoided by affecting total request through dissident adjustment and financial mediation approaches by the administration. Keynesian financial matters is thought to be a "demand side" hypothesis that spotlights on changes in the economy over the short run. Basically Keynesian economics are the different theories about how in the short run, and particularly during the recessions, monetary output is strongly impacted by total request (total spending in the economy).

Both of these policies, keynesianism and monetarism are important and supported by the citizens. These ideas of how economy should be conducted both want to ensure a stable economy for the people. That’s where comparisons end and differences began. Monetarists want absolute freedom in the economy from government interference. They insist that Keynesianism causes the downturns because government it so worried about stabilizing the economy and doesn’t let it fully growth. Keynestists believe government should help aid the economy and can track it’s progress. Therefore a more structured policy is in place to provide aid in keeping stability from outside interferences. Without the government watching, numerous problem can arise such are large businesses taking over the small businesses which can lead to businesses closing and loss of jobs and no one wants to start a business with that as a possibility.

Monetarism is an economic school of thought that emphasis on the money supply in determines the GDP and the price level. Monetarism is a theoretical challenge to Keynesian economics that get popularity in the late 1960s and 1970s.

Economist, Milton Friedman and John Maynard Keynes disagree on many of the economic policies and theories created by each individual. Each financial analyst has their own opinion when it comes to the Theory of the Consumption Function, monetary policy, and the free market. Friedman, a capitalist economist lays out of the benefits and importance of spending and earning money. While Keynes, a man who has more of a socialist view, finds many of Friedman’s theories ineffective.

Consequently, Keynes brought clarity to the subject of the Great Depression and unemployment, his argument suggested that unemployment may not be a temporary condition that the system could naturally recover. Keynes believed that unemployment could in fact reach equilibrium. In this article the Depression was seen as a condition of unemployment brought about a

John Maynard Keynes was an economist instrumental in the theories that aided in the construction of the New Deal during the great depression. He believed that it was appropriate for government to use tax and spend policies in order to stimulate the government. He felt that by using this fiscal policy it would keep the country out of a recession or depression. Beings it is an election year, and the economy affects everyone in the country, I wanted to look into the Keynes theories and discover if it is necessarily a good economic choice.

During the depression the pay income was not successful; not enough money to supply the family. For example painting a whole house back then would only pay you five dollars, now it would cost thousands of dollars. Also,Farmers weren’t able to farm crops which would slow them done for selling goods for money or needs. President Roosevelt had many men working in ditches and getting paid thirty dollars a month. Many of the men were sent home because the government couldn’t pay that many people with no banks working.

During the Great depression, British economist John Maynard Keynes developed what is known as the Keynesian economics. Keynesian economics is an economic theory of aggregate demand or the total spending in the economy. (Investopedia, LLC., 2003)

John Keynes is for spending our way into prosperity whereas Hayek is for letting things self adjust and for government to do nothing to revitalize the economy when it is in free fall like the US economy was in 2008. I will go with the Keynesian model that embraces government spending or stimulus. I strongly believe that the US economy will be worse off today if the stimulus was not enacted. The argument that government spending crowds out private investment and produce the unintended consequences of jobless and , deficit and low productivity is just not

Frank G. Steindl is a Regents Professor of Economics Emeritus at Oklahoma State University. He focused on the theory made by Milton Friedman and Anna Schwartz of how monetary spending helped reduce the unemployment rate of the great

In 1929, the stock market crashed. The values of production gone down, work force lost their jobs, millions of families lost their homes as well as millions of saving accounts were lost because banks closed for good. Those events resulted in the Great Depression. As a result, the world was plunged into economic turmoil. However, two prominent economists emerged with competing claims and sharply contrasting approaches on how a capitalist economy works and how to revive it when depressed. John Maynard Keynes an English economist believed that government has responsibility to intervene in an economical crisis whereas, Friedrich Hayek an Austrian-born economist and philosopher believed that the government intervention is worthless and

The U.S. never fully recovered from the Great Depression until the government employed the use of Keynes Economics. John Maynard Keynes was a British economist whose ideas and theories have greatly influenced the practice of modern economics as well as the economic policies of governments worldwide. He believed that in times when the economy slowed down or encountered declines, people would not spend as much money and therefore the economy would steadily decline until a depression occurred. He proposed that if the government injected money into the economy, it would help stimulate consumers to purchase more and firms would produce more as a result, in a continuous cycle. This cycle is called the multiplier effect. Keynes ideas have

In Friedman’s monetarist construct of money has two side that is highly active. One of the side is money is being the cause of all failures and asymmetries in the economy (in the short term). The other side is neutral which money is influencing only the price level (in the long term). The nominal quantity of money is determined by its supply. On the other hand, the real volume of the money stock is expressed in the amount of goods and services that can be acquired for a given nominal amount of money and is conditioned by the demand for money, which is directly related to the price level.

| Advocates of active monetary and fiscal policy view the economy as inherently unstable and believe that policy can manage aggregate demand, and thereby, production and employment, to offset the inherent instability. When aggregate demand is inadequate to ensure full employment, policymakers should boost government spending, cut taxes, and expand money supply. However, when aggregate demand is excessive, risking higher inflation, policymakers should cut government spending, raise taxes, and reduce the money supply. Such policy actions put

Unemployment and inflation are factors that have negative effects on the performance of the economy as a whole. Therefore, policies to achieve low and stable price inflation, a high and stable level of employment are big macroeconomics issues of our time. This essay focuses on discussing the role of government policy on reducing unemployment and inflation in relation to Keynesian and Monetarist approaches, including examples of impacts of expansionary fiscal and monetary policies on New Zealand economy.