ECO 2013 Principles of Macroeconomics- Write not more than a four-page, doubled -spaced 12 sized...

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ECO 2013 Principles of Macroeconomics- Write not more than a four-page, doubled -spaced 12 sized Arial font report in which you detail the evolution and implementation of Keynesian Macroeconomic...

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ECO 2013 Principles of Macroeconomics-

Write not more than a four-page, doubled -spaced 12 sized Arial font report in which you detail the evolution and implementation of Keynesian Macroeconomic policies and your understanding from having read the final chapters on Fiscal and Monetary policies discussed in the textbook. Cite historical examples of effective Keynesian policies as they have been enacted -from the Great Depression and the Great XXXXXXXXXXRecession of the financial system. Compare vs contrast why Keynesianism did not particularly work during the 70’s stagflation. Why do you think Keynesian policies proved not to be effective at the time and the economic reasoning behind this that vindicates Keynes. Include at least 3 sources in your reaction paper outlined on a third ‘Works Cited” page. Hint-think in terms of Keynesian spending to stimulate AD when the nation undergoes a short run fluctuation in GDP and employment due to the onset of a recession/depression or high inflation. Try to follow your reasoning logically in relation to what the fiscal policy tool-expansionary or contractionary aims at achieving in the macro economy in terms of FE levels of GDP and employment. You may use in—text citations or footnotes in your narrative. You might want to show graphically episodes of expansionary and contractionary Fiscal or monetary policies to support your arguments via the Keynesian AD_AS Model

Answered Same Day Aug 11, 2021

Komalavalli · Accepted Answer

Evolution and Implementation of Keynesian Macroeconomic policies
Evolution of Keynesian Macroeconomic Policies:
Before 1930 economy was dominated by classical Economics, Keynesian idea of economics is dominated in the period from 1946 to 1976.During presidency of Calvin Coolidge from 1923 to 1929 stock market reached its heights and free market idea was at peak. Free market idea came to an end when the stock market collapsed and market fell by 24 per cent within two days on October 1929.Stock market had lost around 84 per cent of its value. After stock market crash unemployment in the economy started to rise. By 1933, there were around 24 per cent of the labor force was jobless. This led to distrust of capitalism. In response to the failure of free market, Economist John Maynard Keynes wrote an important book “The General Theory of Employment Interest and Money”.In this book Keynes aim is to demonstrate theoretical existence of involuntary employment. He also stated that involuntary unemployment resulted from a insufficient aggregate demand raised out of lack of investment in the economy. According to Keynes, income is determined by spending; this theory gave birth to income and output measurement. Keynes states that the intervention of central government is necessary to ensure full employment in the economy, which leads to the extension of traditional functions of the government. Main component involved in central control is macroeconomic policies due to three reasons. They are central government act as an anchor the entrepreneur expectations, this signal the general tendency that government intervention would drive economic activity. Second reason is that fiscal policy would directly impact the effective demand and this can substitute private expenditure when they are reduced in the economy and prevent a nation from insufficient effective demand. Thirdly macroeconomic policies together with juridical and political stance build the society’s institutional structure.
Hicks worked on Keynesian idea and he transformed the Keynesian verbal presentation of his thought into a simple system of simultaneous equations. He also introduced a graph that allowed to join the outcome of two different markets represented in a single diagram by developing IS-LM model. This IS-LM model became an important thing in Keynesian work. Keynesian Macroeconomics considered as a new sub discipline of economics from 1950 onwards.

ECO 2013 Principles of Macroeconomics- Write not more than a four-page, doubled -spaced 12 sized Arial font report in which you detail the evolution and implementation of Keynesian Macroeconomic...

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