Comparing Keynesian Economics and Supply Side Economic Theories

Comparing Keynesian Economics and Supply Side Economic Theories

Length: 506 words (1.4 double-spaced pages)

Rating: Excellent

Open Document

Essay Preview

More ↓
Comparing Keynesian Economics and Supply Side 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 constant, and there is no
surplus in supply, but also no deficit. Supply Side economics
emphasized the supply of goods and services. Supply Side economics
supports higher taxes and less government spending to help economy.
Unfortunately, the Supply Side theory was applied in excess during
a period in which it was not completely necessary.


The Supply Side theory, also known as Reganomics, was
initiated during the Regan administration.

How to Cite this Page

MLA Citation:
"Comparing Keynesian Economics and Supply Side Economic Theories." 123HelpMe.com. 18 Aug 2019
    <https://www.123helpme.com/view.asp?id=23850>.

Need Writing Help?

Get feedback on grammar, clarity, concision and logic instantly.

Check your paper »

Essay on Divisions of The Field of Economics

- ... Micro economists believe it is the forces of supply and demand in any market eliminate any shortages or surpluses in that market. Using Adam Smith's "invisible hand" metaphor, competitive markets will provide the most efficient distribution of resources. Macroeconomics focuses on shifts in the business cycle, and the implications of these movements in economic growth, inflation, recession, productivity, budget deficits, trade deficits, and the value of our currency. Macroeconomists believe that the broader economy, composed of many goods and services will not always self-correct....   [tags: micro economics, macro economics]

Research Papers
1401 words (4 pages)

John Maynard Keynes and His Contribution to Economics and America Essay

- Introduction With the recent recession John Maynard Keynes and his theories are being debated by millions of Americans, though likely without their knowledge, as his theories have become integral to America’s economic policy. A search of “John Maynard Keynes” on Google news, limited to just the past week, yields more than 200 results, illustrating the scope of Keynes’ continued influence. Fueled by concerns over unemployment and inflation the debate rages over government’s role in the economy, including regulation of industry, tax rates, and government spending to stimulate the economy....   [tags: Economics, Economy]

Research Papers
1091 words (3.1 pages)

Economic Theory On The Government 's Responsibility Essay

- When it comes to economic theory on the government 's responsibility in economic regulation there is no one correct way, however, there are theories that have more merit than others. There are two main viewpoints, little government intervention and major government intervention. This very notion is one of the many reasons that the United States split into two main parties and why there are such heavy party lines today. Keynesian school of economics attributed to John Maynard Keynes, who wrote The General Theory of Employment, Interest, and Money, preaches more government interaction to rough around the edges of capitalism....   [tags: Keynesian economics, Macroeconomics]

Research Papers
1663 words (4.8 pages)

Supply Side Keynesianism Essays

- Supply Side Keynesianism A President is measured by how well the economy did during his term in office. More specifically is whether unemployment went up or down, and did they help the economy to fight inflation. Two basic modes of thought on the subject have pervaded public policy since World War II: demand-side and supply-side economics. Demand-side economics is generally known as Keynesianism, named after the English economist John Maynard Keynes. He believed that governments should force interest rates down by printing money and lending it from the central bank at a discount....   [tags: Economics]

Research Papers
660 words (1.9 pages)

Classical Economics And Keynesian Economics Essay

- Two contrasting schools of thought relating to macroeconomics are classical economics and Keynesian economics. Their respective theories have persisted to the present day despite having been conceived centuries ago (Classical theory, 2016). Their significance is still relevant today, as their value lies in certain historical events that tested and tempered them. Events that shook the foundations of one institution while paving a path for the other. This paper will give a brief introduction of each one followed by an analysis of their underlying concepts in order to provide an accurate contrast and comparison....   [tags: Macroeconomics, Keynesian economics, Economics]

Research Papers
906 words (2.6 pages)

Keynesian Economics Vs. Keynesian Policy Essay

- After the Great Depression in 1929 John Maynard Keynes had attempted to provide a solution to much of the economic instability that had occurred in the US. Keynes’ revolutionary solution to the problem, later known as Keynesian economics, had proposed the idea of fiscal policies, being government intervention in the economy in the form if fiscal spending to aid the economy’s growth. In the years that followed an economist by the name of Milton Friedman, a known monetarist, challenged Keynes’ theory by suggesting that fiscal spending should be limited....   [tags: Monetary policy, Keynesian economics]

Research Papers
2447 words (7 pages)

Keynesian Economics and China’s GDP Essays

- 1. Introduction Keynes published and introduced his economic theory in 1936, during the Great Depression, and gave guidance for government in formulation of monetary and fiscal policies. His model was widely acknowledged during recession times when classical economic model somehow failed to effectively and productively solve some economic problems such as unemployment. Although China’s economy is believed to have “Chinese characteristics” and cannot hastily adopt a Western model, Keynesian economics is still believed to receive embracement in China, as government intervention is wider and deeper than most of other economies of such large size....   [tags: economic theories]

Research Papers
1546 words (4.4 pages)

Essay about Classical Economics vs. Keynesian Economics

- My research of Classical Economics and Keynesian Economics has given me the opportunity to form an opinion on this greatly debated topic in economics. After researching this topic in great lengths, I have determined the Keynesian Economics far exceeds greatness for America compared to that of Classical Economics. I will begin my paper by first addressing my understanding of both economic theories, I will then compare and contrast both theories, and end my paper with my opinions on why I believe Keynesian Economics is what is best for America....   [tags: Economics]

Free Essays
1187 words (3.4 pages)

Essay about Classic Economic Model Versus Keynesian Theory

- Classic Economic Model versus Keynesian Theory: Recessionary Impacts The Great Depression in 1929, sparked by a crash in the stock market, was a time which the U.S. economy suffered a tremendous loss in productivity resulting in negative GDP growth. Consumer spending and investment slowed for the next few years due to massive unemployment. “By 1933, when the Great Depression reached its nadir, some 13 to 15 million Americans were unemployed and nearly half of the country’s banks had failed” (“The Great Depression”)....   [tags: Keynesian economics, Macroeconomics]

Research Papers
875 words (2.5 pages)

Essay about Keynesian Economics

- Macroeconomics is the branch of economics concerned with the aggregate, or overall, economy. Macroeconomics deals with economic factors such as total national output and income, unemployment, balance of payments, and the rate of inflation. It is distinct from microeconomics, which is the study of the composition of output such as the supply and demand for individual goods and services, the way they are traded in markets, and the pattern of their relative prices. At the basis of macroeconomics is an understanding of what constitutes national output, or national income, and the related concept of gross national product (GNP)....   [tags: Keynesian model, Macroeconomics]

Research Papers
1668 words (4.8 pages)

Related Searches

During the 1970's, the
state and local governments increased sales and excise taxes. These
taxes were passed from business to business and finally to the
customer, resulting in higher prices. Along with raised taxes for
the middle and lower classes, this effect was compounded because
there was little incentive to work if even more was going to be
taxed. People were also reluctant to put money into savings
accounts or stocks because the interest dividends were highly
taxed. There was also too much protection of business by the
government which was inefficient and this also ran up costs, and
one thing the Supply Side theory was quite good at was reinforcing
inflation.

The two opposites of the Supply Side and Keynes' theories are
well matched theories, but it was the time of use that made them good
and bad. Keynes' theory was used during that aftermath of the Great
Depression, a catastrophe America will never forget and will never
be able to repay Keynes for the economic assistance in recovering
from it. The Supply Side theory was used after a long period of
prosperity, and although seeming to continue the practices of the
past administration, was the cause of a fearful
recession. The success of those or any economic theory is based on
the time at which it is implemented.
Return to 123HelpMe.com