Trickle-Down Economic Vs Keynesian Economics

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When it comes to dealing with the recession, there are usually two main schools of thought, Trickle-down economics and Keynesian economics. Trickle-down economics, also known as Supply-side, focuses more on slashing taxes to helping the rich who in turn help the poor. Where as Keynesian economics puts more emphasis on government spending to help stimulate aggravated demand. Aggravated demand simply means the total amount of goods or services demanded at a certain time. Keynesian policies were developed in the 1930s by the British economist John Maynard Keynes. Until this time classical economists believed that there was a natural boom-bust cycle to the economy that was modest and self-regulating. For the most part they were right. That is until …show more content…

First, he proposed that the government should reduce interest rates. Second they should begin investing in infrastructure, which increases the amount of income in the economy, causing increased spending by the public. Hypothetically, this expanded spending increases business investment, along with more production to meet the increased demand. This course of action jumpstarts a doomed economy and, voila, no more Great Depression. FDR implemented Kenyes’ second approach with the creation of government projects such as the building of railroads and national parks. By combining Keynes’ ideas with Roosevelt's government run job programs America was able to pull itself out of the Great Depression and return to a time economic stability. The question now circulating is will Keynesian economic work in today’s day and age. If it worked so well in the 30s clearly it should work again. Right? Well the answer is not that simple. The reason Keynesian economics worked so well back then was not because of this prefect economic solution but rather because of the war. The start of WWII forced the government to increase spending in order to manufacture the necessary equipment needed for the war effort. Consequent endeavors to spend ourselves out of subsidence, for example, endeavors at present in progress by the Obama organization, have been less successful without a war to

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