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Keynes Vs Hayek

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How did Keynes and Hayek impact the way we view economy now? Soon after the stock market crash happened in 1929 which was known as the era of the Great Depression many economist came up with different theories in how the U.S went wrong when managing the economy which ultimately led to the Great Depression. During the Great Depression this left many workers unemployed which as led to a high poverty rate, this encourage economist such as John Maynard Keynes and Friedrich Hayek find a way to lift up the U.S economy and employment rates. Both economists had differentiating philosophy’s, their disadvantages and advantages, and a supporting view.
To begin, John Maynard Keynes is a common name to hear be mention in a high school economic textbooks. …show more content…

A con to Keynes philosophy is that increasing demand would cause a inflation. An inflation is when there is a sudden increase in prices. Hayek argued that with the inflation the government would have to increase money supply for those in full employment thus increasing government spending. Many would disagree with Keynes economic theory because in order to create jobs with creating public projects the government would have spend money to be able to fund them. However pros to Keynes theory is that if the government were to fund these public projects it will help increase the number of unemployment rates and in turn this would encourage them to spend that money. The money would soon be given back to the government that would help pay off the debt they owe for funding that public service this the process of the multiplier effect. Friedrich Hayek had his own flaws in his economic theory because as the government turned to supply often times since demand was low it would be harder to get investors to invest money. Although that might be a negative factor the work in the free market it does give some control to the consumer because as they invest or spend their money on a particular product it stimulates economic growth. When a product becomes scarce the more people are willing to buy

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