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Jameson AP World History 1 Mar. 2024 Causes Of The Great Depression

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Caroline Foley Mr. Jameson AP World History 1 Mar. 2024 Causes of the Great Depression An idea founded by John Maynard Keynes, circular flow condenses the over-complicated economy into a simple shape, the circle. When people spend money, someone else receives money, which creates stability in our economy. So what happens when the flow gets blocked? How does it get fixed? Should the government intervene? And why is Keynes' idea of circular flow the most viable option for our economy? In a perfect world, there would be no recession, depression, or economic struggle. Unfortunately, this is not an option. And so, what needs to happen to fix the economic crisis? Keynesian economics believes that more money should be pumped into the government, creating …show more content…

Jameson AP World History 1 Mar. 2024 Causes of the Great Depression An idea founded by John Maynard Keynes, circular flow condenses the over-complicated economy into a simple shape, the circle. When people spend money, someone else receives money, which creates stability in our economy. So what happens when the flow gets blocked? How does it get fixed? Should the government intervene? And why is Keynes' idea of circular flow the most viable option for our economy? In a perfect world, there would be no recession, depression, or economic struggle. Unfortunately, this is not an option. And so, what needs to happen to fix the economic crisis? Keynesian economics believes that more money should be pumped into the government, creating more government jobs and increasing government spending. This aims to restore the economy and the circular flow of money. To restore this flow, people need money, but due to the recession or depression, there is very little money. So to fix this, Keynesian theory says, “State intervention is necessary to moderate the booms and busts in economic activity, otherwise known as the business cycle” (IMF). Keynesian economists also believe that printing money can help solve this issue. However, this can also be taken to an extreme, and like everything, it is important to do it in moderation. Printing money can help kickstart the economy by pushing interest rates down and greatly reducing human and financial losses (New York Times). This idea of thinking is very government intervention positive, so that begs the question, should the government intervene in the economy, and should the government have an obligation to help fix it? The short answer is yes, the government should intervene, but there is more to it than that. The government is a key part of every society and every society needs a way to track the exchange of goods and services, if this system suddenly stops working then the only people who truly have the power to fix

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