The Keynesian Economic Depression ModelThere are different causes and approaches for explaining scrimp downturns that have been proposed by various experts and theorists However , the successful retrieval from the Great Depression of the 1930s and the economic hegemony that the United States enjoyed in conclusion have contributed to the prominence and significance of the Keynesian theory of ease that adhered to a purely economic frameworkNamed after the father of modern economics , John Maynard Keynes , the Keynesian theory focused on the interdependence of consumers and critical role of consumer spending in shake up and maintaining economic productivity . Under this theory , a trim back in aggregate consumer demand and expenditures in the economy rent cause a substantial deterioration in income and pursuit . Consequen tly , economic depressions occur because people store or hoard their money even if money supply is dramatise .
The weakening of consumer spending on the other hand whitethorn be attributed for different reasons such as perceived pessimism on economic activity similar to the stock market bankrupt that happened during the Great Depression of the 1930 s destruction and despair cause by natural calamities as well the Marxist socio-political perception of the turnout disparity between the capitalists and the laborers in which the latter (poor ) is incapable to submit or buy what the former (capitalists ) produces in surplu s . The Keynesian theory further suggests t! hat when the economy is experiencing a downturn governments should life in to address the shortfall in demand by initiating spending or by slashing taxes (Knoop , 2004 , pp50-51 ) The former...If you want to overtake a full essay, order it on our website:
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