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Essay / Research Paper Abstract
This 7 page paper looks at when John Maynard Keynes believed that the model of laisez faire capital would not work and when the free market would benefit from government intervention. The paper includes issues such as unemployment and the presence of surplus in an economy and the use of the multiplier effect. The bibliography cites 15 sources.
Page Count:
7 pages (~225 words per page)
File: D0_TEkeyfail.rtf
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Unformatted sample text from the term paper:
markets are left to operate completely freely without any delay to clearing then the result would be a prosperous economy 3. Government can stimulate demand with specific policies which make
up for the demand which would not otherwise be present in a laissez faire economy. 4. Without intervention when the supply of labour outstrips the demand the cost of
labour would fall, but he did not necessarily believe that the labour cost would fall enough to stimulate the economy back to full employment. 5. Fears over an economy can
lead to a self fulfilling prophecy of doom as demand falls 6. Government can use fiscal policies to increase demand 7. Tools to increase demand may include lowering taxes and
direct investments 8. It was investment by the government that helps end the Great Depression 9. The multiplier effect can be managed to increase demand and employment.
John Maynard Keynes is the founding father of demand side economics and his hides were in contradiction to classical and monetarist theories.
He believed that some markets did not function properly in laissez faire capitalism and as such there is the need for intervention (Nellis and Parker, 1996, Keynes, 1963, 1997, Leontief,
1936). There are different market considerations where there should be intervention according to Keynes as the market forces would not be sufficient to implement the required change or bring it
about either at all or in any viable time frame (Marshal, 1997). Keynes argues that the level of output and employment in an economy was the result of the
aggregate demand for goods and services in that economy, and that the can be the stimulation of employment where there is both surplus production and unemployment in an economy,
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