Keynesian Economics - Deepstash
Keynesian Economics

Keynesian Economics

John Maynard Keynes (1883-1946) was interested in the level of national income and the volume of employment rather than in the equilibrium of the firm or the allocation of resources. 

He was still concerned with the problem of demand and supply, but “demand” in the Keynesian model means the total level of effective demand in the economy, while “supply” means the country’s capacity to produce. When effective demand falls short of productive capacity, the result is unemployment and depression; conversely, when demand exceeds the capacity to produce, the result is inflation.

4

STASHED IN:

29

STASHED IN:

0 Comments

MORE IDEAS FROM Economics - Keynesian economics

  • Central to Keynesian economics is an analysis of the determinants of effective demand. 
  • The Keynesian model of effective demand consists essentially of three spending streams: consumption expenditures, investment expenditures, and government expenditures, each of which is independently determined. Foreign trade is ignored.
  • Keynes attempted to show that the level of effective demand, as determined in this model, may well exceed or fall short of the physical capacity to produce goods and services. 
  • He also proved that there is no automatic tendency to produce at a level that results in the full employment of all available human capital and equipment. His findings reversed the assumption that economic systems would automatically tend toward full employment.

4

STASHED IN:

18

Deepstash helps you become inspired, wiser and productive, through bite-sized ideas from the best articles, books and videos out there.

GET THE APP:

RELATED IDEA

Positive Economics

Positive Economics is a stream of economics that focuses on the description, quantification, and explanation of the developments in economics, the expectations, and the associated phenomena. It heavily relies on objective data analysis, relevant facts, and associated figures.

2

STASHED IN:

11

STASHED IN:

0 Comments

Adam Smith: the father of modern economics

Adam Smith was an 18th-century Scottish economist, philosopher, and author. He is considered the father of modern economics.

  • Smith was born in 1723 in Scotland. He studied moral philosophy at the University of Glasgow and enrolled in postgraduate studies at the Balliol College at Oxford University.
  • After returning to Scotland, Smith held a series of public lectures at the University of Edinburgh and earned a professorship at Glasgow University in 1751. Later he earned the position of Chair of Moral Philosophy.
  • In 1763, he accepted a more remunerative position in France. There, Smith counted philosophers David Hume and Voltaire as contemporaries.

1

STASHED IN:

36

STASHED IN:

0 Comments

Over 50 years ago, economist William Baumol noted that economics was a theory of the economy that left no place for entrepreneurship. Economic models, simply put, were “entrepreneur-less.” Economics is no better today; in fact, it’s arguably worse. It focuses on faceless economic forces in formalized models. Modern economics is to a great extent a theory of equilibrium and efficient outcomes. But it is not a theory of the market.

5

STASHED IN:

20

Modern economics is a theory of the economy that leaves no place for the entrepreneur. So where should entrepreneurs turn to improve their understanding? The Austrian school of economics might be the answer.

STASHED IN:

7 Comments