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 Keynes argued that the solution to the Great Depression

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jancancook




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Keynes argued that the solution to the Great Depression Empty
PostSubject: Keynes argued that the solution to the Great Depression   Keynes argued that the solution to the Great Depression Icon_minitimeSat Mar 26, 2011 4:18 pm

Keynes argued that the solution to the Great Depression was to stimulate the economy ("inducement to invest") through some combination of two approaches: a reduction in interest rates and government investment in infrastructure. Investment by government injects income, which results in more spending in the general economy, which in turn stimulates more production and investment involving still more income and spending and so forth. The initial stimulation starts a cascade of events, whose total increase in economic activity is a multiple of the original investment.[4]

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