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Lecture 4

Week 4 - The Government in the Economy [P2]

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Administrative Studies
ADMS 1010
Yong Troy

Week 4The Government in the Economy ADMS 1010TroyPart IIRise of KeynesianismThe Great Depression brings previously unheard of economic despair to Canada and the Western World Due to our reliance on exports agriculture and manufacturing the Great Depression hurt Canada more than most other countriesThe Great Depression changed the view of state intervention into the economy Ultimately it was decided that the marketplace could not correct itself It was up to government intervention to kickstart the economic recovery John Maynard Keynes theories become prevalent in Canada starting in World War II The government needed to take an activist role in the economy by increasing spending and reducing tax rates Creating Crown Corporations and growing the size of the government was just one way to achieve thisWe call that the rise of the public service was created out of the demands of easing the Great DepressionIncreases in business regulation Increases in social welfare services The idea that government could solve every problem from unemployment to socialized medicine The electorate voted in political parties who promised more government servicesDecline of KeynesianismKeynes theories continued to dominate until the 1970s when other external and internal pressures made it impossible for government to interveneo ie increased cost for oil high unemployment high inflationUnfortunately it was paid for with borrowed moneyThe impact of the recessions of the 1970s and 1980s left governments broke Governments turned from expenditure to inflation and budgetary control Rise of NeoConservatismThe Return of KeynesianismWith our current economic crisis there has been a return to Keynesian economics Governments are now going into debt to try to stimulate spending
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