Modern Economic Theories

Modern Economic Theories

Two controversial economic policies are Keynesian economics

and Supply Side economics. They represent opposite sides of the

economic policy spectrum and were introduced at opposite ends of the

20th century, yet still are the most famous for their effects on the

economy of the United States when they were used.

The founder of Keynesian economic theory was John Maynard

Keynes. He made many great accomplishments during his time and

probably his greatest was what he did for America in its hour of need.

During the 1920’s, the U.S. experienced a stock market crash of

enormous proportions which crippled the economy for years. Keynes knew

that to recover as soon as possible, the government had to intervene

and put a decrease on taxes along with an increase in spending. By

putting more money into the economy and allowing more Americans to

keep what they earned, the economy soon recovered and once again

became prosperous. Keynes ideas were very radical at the time, and

Keynes was called a socialist in disguise. Keynes was not a socialist,

he just wanted to make sure that the people had enough money to invest

and help the economy along.

As far as stressing extremes, Keynesian economics pushed for a

“happy medium” where output and prices are conezt, and there is no

surplus in supply, but also no deficit. Supply Side economics

emphasized...

Modern Economic Theories

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