2. Fighting the Great DepressionKeynes argued that the
governmentshould fight the Great depressionthrough his system,
called theKeynesian Theory. This theory statesthat in order for the
government to besuccessful, the government shouldintervene. Another
part of the theory isthat there should be a monetary policy,which
is a policy in which the decisionsmade by a central bank which
affectsthe size of the amount of money. Thistheory also says that
the governmentshould intervene by making sure thatthe business
cycle flows as smoothlyas possible.
3. Franklin Ignores the theoryOriginally, Franklin had ignored
Keynes and his theory.There are multiple reasons that were behind
thisdenial. One of these reasons included the fact thatRoosevelt
knew that Keynes had a Bachelors degreein math, rather than having
one in economics. Anotherreason to this is because Keynes had not
fullydeveloped his theory when he first met with Roosevelt.Another
reason as to why Roosevelt ignore the theoryis because there were
so many numbers involved thatRoosevelt thought that he was a
mathematician ratherthan an economist.
4. Did it help the Great Depression Yes, the theory of Keynes
helped the U.S. outof the economy, but it was not the only
thingthat helped the U.S. Keyness book, TheGeneral Theory of
Employment, Interest, andMoney, he said that the Great Depression
hadbeen caused by failure of aggregate demand.After lots of debate,
the government finallydecided that Keyness Theory was the key outof
the Great Depression, and so theyincreased their spending.
5. A Downside to Keyness TheoriesOne of the major downsides to
the Keynesstheories is that it is mainly for periods ofrecession
rather than periods of economicgrowth. What this means is that it
is mainly agood system to use during a recession, and itwould have
no effect if it were to be used in agrowing economy. Another
downside is that insome cases, it can create a huge debt over along
time period.
6. Explaining it in simple termsKeyness Theory basically says
that in order forpeople to be rich and happy, and not be pooror
sad, the government, or the leader of ourcountry, should help the
people as much asthey can. The government should also create arule
where important people decide on differentthings, which helps the
U.S.A. Become richerand happier.
7. Using Keyness theory in modern timesKeyness theory can be
implemented todaythrough many different actions. The firstaction
increases in the government spendingand investment. Another action
wouldinclude expanding so that there would bemore creation of jobs.
This action would alsoneed investment in better forms of
energy.Another thing that the government can do isincrease the
aggregate demand.