Keynesian Economic Policies before and after 1970 Coursework

Keynesian Economic Policies before and after 1970 - Coursework ExampleFriedman suggested that governments have a central bank monetary policy whose main aim would be to sustain the equilibrium of get and supply of specie in the economy. As opposed to the Keynesian economics which mainly focused on value stability of a countrys currency and the panic resulting from insufficient supply of specie that lead to alternate currency and collapse, Friedman and his monetary policy focused on stability of prices as a result of the equilibrium between funds supply and the affect of money (Lipsey and Chrystal, 2007). The Keynesian economic principles henpecked the macroeconomic world in the 19th century in to the early 20th century, in a period characterized by the rise of capitalism. This period is referred to as the Golden Age of capitalism. The golden age of capitalism, led by The US and other Western economic powers especially after the realism War II, (from 1945 to middle 1970s) saw the rise of capitalist nations in to major economic regions of the world. Keynesian Economic Policies A overriding economic principle in the 1930s and during the Great economic depression was that the economy would recover by itself without any interventions from the government. A British Economist, Keynesian, then suggested that governments should increase their spending and cut taxes so as to touch on their economies during the depression (Eatwell and Millgate, 2011). Without government intervention, he argued that the economy would be greatly unnatural by high unemployment judge and would never recover. In his opinion, increasing government spending during an economic downturn would help to boost charter, as well as setting off the chain of the chain of demand by suppliers and workers whose incomes would have been affected by the increased expenditure by the government. Reducing the tax burden would also enable battalion to have more disposable income, which would help to boost demand in the economy. He also contended that the roughly appropriate fiscal policy in periods of high unemployment is to run a deficit budget (Eatwell and Millgate, 2011). Keynesians ideas were largely ignored by both the British and the US Governments at the time, until after the World War II (Eatwell and Millgate, 2011). After the war, Keynesians principles of a fiscal policy, government involvement in spending and eluding taxes with the aim of maintaining employment rates became the center of attraction in macroeconomics, both in the debate of topic economic policies as well as in research. In the US, the Employment Act (1946) helped the government to stir up using Keynesians economic principles to regulate its economy and improve the employment rate. Application of Keynesian principles saw governments regain economic stability throughout the 1950s and 1960s as they recovered from the economic depression. The Keynesian economic theory was based on the principle of a ci rcular flow of money in the economy (Eatwell and Millgate, 2011). This implies that when one person spends money, kit results in another person earning money. This would then raises the demand of the later, leading him to also spend the money and through buying of goods and services, leading to another person earning the money and so forth. According to Keynes, it is this circular flow of money that enables economies to function well. According to the Keynesian Theory, the aggregate demand created by