The Keynesian School Of Economic Thought

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Our economy has evolved from centuries ago to what it is today from the start of supply and demand and learning how to make trades. The foundations of this learning process has also came from theories on how to manage and control the economy. This has been built from several thinkers and theorist implanting their ideas into action and having results in the prosperity or failure of an economy. As these theories have evolved as well and some with great prosperity they have been recognized and titled as the Keynesian School of Economic Thought as this is a theory believing aggregate demand is influenced by public and private economic decisions. There is also the Monetarism School of Economic Thought which focuses on how the money supply has…show more content…
The only thing that really drags down the aggregate demand or GDP would be if the country brought in more imported goods than anything else. A public decision would be the money that government programs put into the economy, investing in programs such as education, medical research, Medicare and other things. In the formula, these variables would be Government spending and Investment spending. Private decisions are an individual’s decisions on where to spend money. In the formula, this is represented by investment spending and consumption spending. Keynesian Economics relies on that they believe the government can kickstart the economy by spending money when in a down period. Another school of thought is that changes in aggregate demand, whether anticipated or unanticipated, have their greatest short run effects on real output and employment, not on prices. John Maynard Keynes said that everything in life is in the short run. The theory believes that just because something is happening in the short run, may not necessarily mean it will happen in the long run. He thought the government should get involved when the economy was stagnant to give it a boost and get it moving again in the short run. They also believe that monetary policy effects, output and employment only. That makes sense because as the more money that is pumped in, the more a good needs to be produced and the more goods needing to be produced means the more people you
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