Macroeconomics Theory

Topics: Keynesian economics, Macroeconomics, Economics Pages: 4 (1269 words) Published: January 1, 2014
Harsh Patel
Pure Keynesism is very difrrent from all the other theories. I believe that this is the best out of supply side, adaptive expectations theory and rational expectations theory. Pure Keynesium is very diffrent from all the other theories in which in pure keynesium, view that in the short run, especially during recessions, economic output is strongly influenced by aggregate demand or the total spending in the economy. In the Keynesian view, aggregate demand does not necessarily equal the productive capacity of the economy but instead, it is influenced by many factors and sometimes behaves erratically which affect things like production , inflation, as well employment. The theory of Keynesian came from the John Maynard Keynes. The concept of keynesianism was first seen in the book called, The General Theory of Emplyoment, Interest and Money. One reason I prefer Keynesianism over the rest is because I agree with many things that Keynesian economist say. One of those things is Keynesian economists often argue that private sector decisions sometimes lead to inefficient macroeconomic outcomes which require active policy responses by the public sector.The monetary policy actions by the central bank and fiscal policy actions by the government, in order to stabilize output over the business cycle. One thing about Keynesian economics is that it advocates a mixed economy – predominantly private sector, but with a role for government intervention during recessions. The way Keynesians fix the economy which i agree with is to fight inflation they raise taxes, along with to cut unemployment they raise taxes to help the economy. In the economy we have today, Keynesian is the mainstream one along with the one that is followed today.

Unlike Pure Keynesian, supply side economics isnt a good economic approach. I defintilely think that humans are not rational and they don't always know what is the best for them. In Supply-side economics it argues that...
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