great depression?

Question

how did the great depression contribute to the development of keynesian economics?

Answer 1

Keynesian economics relies on a mixture of the state and the private sector. The government was eventually forced to step in and create jobs to help combat the depression. Roosevelt's New Deal was all about creating jobs. This also led to the creation of welfare.

Answer 2

The great depression contributed to the development of Keynesian economics because of the widespread belief that government taxing and deficit spending cured the great depression.

For a mainstream refutation of that idea, please see Milton Friedman's work on the role of the Federal Reserve throughout the Depression. His contribution to an understanding of the Great Depression is also summarized in the second to last issue of The Freeman, put out by the Foundation for Economic Education.

For a theoretical refutation of that idea, please see the Austrian Theory of the Business Cycle.

Answer 3

Classical economics had no explanation for the long deep economic depression that began with the market crash in 1929. In 1936 THE GENERAL THEORY OF EMPLOYMENT, INTEREST AND MONEY was publish and was seized on by government officials as a policy prescription as a way out of the economic problems, and as a justification for many programs already in place to alleviate the human misery that the depression had produced.The recovery generated by a government-led war economy lent credence to Keynesian claims about the ability of governments to achieve and maintain full employment

Answer 4

Great depression started during 1930's due to following up of classical theory and Prof. Keynes examined the situation prevailed in US economy and find out excess supply was the root cause of great depression and developed his theories such as the effective demand, and so on. His theory solved the problem of great depression and he was called as the father of macro economics.

Answer 5

Keysenians wanted the government to bail them out of everything. It didn't work. That's why Keysenians never won the Nobel Prize in Economics.