PLS 101 Lecture 31: Keynesian Economic Theory

2 Pages

Political Science
Course Code
PLS 101
Joel W.Paddock

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PLS 101 05/02/2017 I. Keynesian Economic Theory a. John Maynard Keynes = Aggregate Demand b. Recessive environment High Unemployment Insufficient Monetary Policy (Negative economic growth) AD = Contract the money supply = Lower interest rates Fiscal Policy = lower taxes =raise spending =Run deficits c. Inflationary Environment Low Unemployment Too Monetary Policy (positive economic growth) Much = Contract the money supply AD = Higher interest rates Fiscal Policy = Raises Taxes = decrease spending / raise prices = run surpluses II. Supply Side Economic Theory a. Productivity – output per worker hour i. Tax cuts for those with the greatest propensity to invest 1. Ie. Wealthy individuals and corporations b. Deregulation of the economy i. Cutting back on environmental regulation ii. Cutting back on consumer regulation
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