Explain the Rise and Fall of Keynesianism Essay

Explain the Rise and Fall of Keynesianism - Essay ExampleAccording to the essay Rise and fall out of Keynesianism findings, Keynesianism suggests that often secret sector decisions cause inverse macroeconomic outcomes and hence it is suggestible for the public sector to deliver active policy responses which mainly embarrass central banks monetary policy actions and goernments fiscal policy actions. Keynes argues that these activities would assist the economic sector to stabilize output over the business cycle. Although Keynesian theory can be stated thus in simple terms, it comprises larger ideas. To illustrate, Keynesianism has a close similarity with the concept of command Glut proposed by classical economists. However, it is identified that classical economists had the disagreement regarding the conditions of the general inundate as some of them believed in Says law publish creates its own demand (Best, n.d.). In contrast, Keynes argues that insufficiency in aggregate demand for goods can be featured as the direct cause of general glut which would lead to economic decline and subsequent unemployment vexedies. In this situation, Keynesianism recommends (as cited in Blinder) that thoughtful governmental policies can easily overcome such crises if these policies are effectively utilize to increase the aggregate demand. This, in turn, would mitigate the adverse impacts of unemployment and deflation. Similarly, Keynesian economics brings some theoretical basis for a crucial distinction between unwilled unemployment and voluntary unemployment. ... This in turn would mitigate the adverse impacts of unemployment and deflation. Similarly, Keynesian economics brings some theoretical basis for a crucial distinction between instinctive unemployment and voluntary unemployment. From the Keynesian point of view (as cited in Knoop, 2010, p.40), the individuals who seek jobs at the existing wage rates can be grouped into involuntary unemployed. Corry (n.d.) reflect s that Keynes in advance(p) concepts produced some revolutionary changes in the economic sector since the traditional economists believed that unemployment was resulted from certain labour market rigidities such as excessive wage claim, trade center activities, and unemployment pay (ibid). According to Keynesianism, the increasing unemployment rate can be directly attributed to the failure in total spending caused by the inefficient business decisions of private firms. Therefore, it is obvious that government has to play a crucial role in formulating efficient growth policies which would facilitate sustainable economic growth of the country. In short, Keynesian economics constitutes a demand based economy (Reference for Business). Limitations The Keynesian economics gave greater emphasis on employees wage rates without considering the profitability of the firm. Although, it had aided the estate to ensure employee welfare, the constancy of this system was always subject to change. For instance, sometimes, international competition adversely affected the capital requirements and public expenditure of the nation. In such difficult situations, the government failed to meet adequate funds for wage distribution. As