2. Biography
Britisheconomist
Born on June 1883
Wrote “The General Theory of
Employment, Interest and
Money” during WWII
He’s known as the Father
of Macroeconomics
3. Major Achievements
Helped in the economy’s recovery during
the Great Depression
Influenced the general economic boom by
Western Nations between 1945-1975
Formed the basis of Keynesian economics
Introduced the Macroecomics theory
◦ He believed that government spending
could pull an economy out of recession
4. The Great Depression
o Period of high rates
of unemployment
o He advocated interventionist
economic policy
o Urged government to:
o use financial and monetary measures to
reduce the adverse effects of business
cycles, economic recessions, and
depressions
o Spend on public works like programs to
promote employment
5. He outlined the limitations of
Microeconomics* theory. Due to
unemployment and poverty, the demand
for good and services dropped. Many
workers were unwilling to accept lower
wages
*Studies the individual parts of economy, the household
and the firms, make decisions to allocate limited
resources. How good or services are bought and sold.
6. High unemployment rate greatly influenced the
development of macroeconomics
Challenged the established neoclassical economics
Introduced important concepts such as:
o Consumption
o Multiplier
o Marginal efficiency of capital
o Liquidity preference
END OF
Government's responsibility is to NEOCLASSICAL
◦ Reach and maintain full employment THEORIES!
◦ Regulate markets and free trade such as Laissez-faire
7. Keynesian Economics Impact
Aid in the formation of the 20th Century’s
economy
Consequences of the Great Depression were
lessened
Government took an active role in the
country's economy (Departure from
neoclassical theories)
8. Why did the Keynesian theory
didn't work?
Government spend too
much money on post-WWII
events. Examples: Vietnam war, sending the first man to the moon
◦ The Keynesian solution stopped working
◦ Unemployment became worst
◦ It created Inflation
◦ In conclusion Keynesian theories work best on
economics catastrophes
9. Keynesian Economics Nowadays
New stimulus Bill package
◦ President Obama’s
plan to save the U.S.
economy with a massive
round of government
spending was based
on Keynes' ideas
10. Bibliography
Ryan, James John Maynard Keynes John Maynard Keynes; 2005, p1-2, 2p
Columbia Electronic Encyclopedia, 6th Edition; 10/1/2009, p1-1, 1p. See Keynes’s Collected Writings
(30 vol.,
1971–80) Biography by R. Skidelsky (3 vol., 1986–2001); G. Fletcher, the Keynesian Revolution and Its Critics
(1987);
P. Clarke, The Keynesian Revolution in the Making, 1924–1936
(1989).
NPR story: Davidson, Adam and Blumberg, Alex report was produced in collaboration with Chicago Public Radio's
This American Life, Obama Gives Keynes His First Real-World Test, 2009
Keynes, John M., The General Theory of Investment, Interest and Money 1936
Lawler, JosephThe American Spectator, We’re All Keynesian Again, 2009
