Keynesian Economics (Revision Webinar Video)
- AS, A-Level, IB
- AQA, Edexcel, OCR, IB, Eduqas, WJEC
Last updated 10 May 2017
Here is a recording on key aspects of Keynesian economics applied to current policy issues for the UK and other countries.
An understanding of Keynesian ideas can be helpful in evaluating macroeconomic stability in terms of prices, jobs and incomes.
Keynesians believe that free markets are volatile and not always self-correcting in the event of an external shock
The free-market system is prone to lengthy periods of recession & depression
Economies can remain stuck in an “underemployment” equilibrium
In a world of stagnation or depression, direct state intervention may be essential to restore confidence and lift demand.
Keynes was one of the first economists to criticise the profession for adhering to unrealistic assumptions
“In terms of economic policy Keynesian economics has only one proposition: that governments should make sure that aggregate demand is sufficient to maintain a full-employment level of activity.”
“The purpose of the General Theory (Keynes, 1973A) was to explain how an economy could get stuck in a low employment trap. This explanation was provided by the theory of effective demand .”
Lord Robert Skidelsky
Slides from the presentation