Keynesian and Monetarism

Economics in 1929 to the 1970's.
The two theories that came to be during the Great Depression and the first of stagflation.

Transcript

1. Keynesian Economics VS Monetarism Wafa
2. The Incident that Lead to Keynes Idea to take Practise… The Great Depression that began in Oct. 1929. Keynes Square Deal was adopted by the U.S. President, Franklin D. Roosevelt in 1933.
3. Keynesian Economics Keynes advocated increased government expenditures and lower taxes to stimulate demand and pull the global economy out of the Depression. To avoid the ups and downs, Keynes suggested that during a recession, governments needed to spend more money and reduce taxes. This would provide jobs and leave more money in people’s pockets that could be spent in the economy Then during ‘boom times’, to pay back the money that had been spent during the recession by government, governments should spend less money and increase taxes. This would soften the boom, evening out the highs and lows of a capitalist economy
4. Keynes Step Three Graph
5. The Incident that lead to Monetarism… Both inflation and recession occurring at the same time (stagflation) in the 1970’s, and so this idea was adopted by the US, Great Britain, and Canada.
6. Monetarism A set of views based on the belief that inflation depends on how much money the government prints. It is closely associated with Milton Friedman, who argued, based on the quantity theory of money, that the government should keep the money supply fairly steady, expanding it slightly each year mainly to allow for the natural growth of the economy using the supply-side economics.