POLS 1090 Lecture Notes - Lecture 10: Liquidity Trap, Aggregate Demand, Ontario Health Insurance Plan
20 Nov 2016
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Liquidity trap: a situation where people prefer to have there cash in liquid form. Keynesianism: represented a new set of state responsibilities to manage aggregate demand in order to sustain full employment, had consensus after 1945. Accepted that the state could maintain greater social order through avoiding a return to mass unemployment. By sustaining levels of aggregate demand and employment. Workers would be a strength end position and could demand higher wages from employers. Keynesian consensus after 1945 was sufficiently strong to outweigh concerns over inflations and it impacts on employers in terms of wage demands. The orthodox approach which had argued for balanced budgets and deficit avoidance. Was fundamentally changed social security programs the welfare state. State programs are developed to manage specific inequalities. Under capitalism deep inequality that is derived from the dependence of wage workers on their income to purchase the necessities of life.
