Answer to Question #310096 in Microeconomics for Vtg

Question

Explain Keynes’s theory of investment and why it is central to his more general theory of output and employment. Are Keynes’s ideas still relevant today?”

Answer 1

Keynesian economics is a macroeconomic economic theory of total spending in the economy and its effects on output, employment, and inflation.

Based on his theory, Keynes advocated for increased government expenditures and lower taxes to stimulate demand and pull the global economy out of the depression.

Keynes was considered helpful in the “Golden Age of Economic Growth” after the Second World War, but he is largely ignored now that we have recreated conditions similar to the Great Depression in many countries.