ECON 0110 Lecture Notes - The General Theory Of Employment, Interest And Money, John Maynard Keynes, Keynesian Economics
Document Summary
Classical economic theory and different economic systemsclassical economic theory. The general theory of employment, interest and money, 1936. Argued that there is no automatic tendency for the economy to move toward full employment. Unemployment is caused by a lack of sufficient aggregate demand. Producers adjust output to satisfy the desires of customers. If demand is low, output will be low. When aggregate demand is low, government should try to boost aggregate demand. Other things being equal, an increase in government spending will stimulate the economy. Other things being equal, a tax cut will stimulate the economy. Questions that need to be answered by any economic system. I exchange my goods or services for your goods or services. The central government owns many of the factors of production. Examples: government might own the railroads, the oil fields, the iron mines, the banks, the hospitals, the schools, etc. Government planners often decide what will be produced and who gets the output.
