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    pretty much what is asked in the title, need to know all about it, all the nitty gritty, how it links to economics, will be very thankfull!
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    Keynes believed it was in governments interest to manage the economy by manipulating demand (e.g via government spending) in a proactive, cyclical way. So for example, spend when the economy is in recession and downturn and vice versa.

    Keynes idea is based around the multiplier effect, he believed full employment should be the number 1 target of governments and government spending in recessions will increase output and employment, hoping that once people are in jobs, they have more money, when they have more money, they spend more = hence boosting AD and getting out of a recession.

    He also believed in the idea of 'animal spirits' (confidence in the economy) - when animal spirits is low, people are reluctant to spend and invest. And if you try and go too harsh on austerity and 'cuts' then that is simply self-defeating. So Keynes believe Government SHOULD act in the economy when this happens, in a hope to increase animal spirits which will boost the economy.

    However, if you have close to full employment (e.g when AS is straight) and AD overshoots, you get inflationary pressure on the economy, demonstrated by this graph: http://www.bized.co.uk/sites/bized/f...s/keynrefl.gif

    The whole economics debate is based around the idea of Keynes v Hayek ('classical' theory) - two opposing sides of the debate that dominated Economic policy since since the 1930's depression.

    And if you still want to give Keynes some perspective in the whole economic debate and how it links into Economics, then I highly recommend you watch the rap: http://www.youtube.com/watch?v=d0nERTFo-Sk
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    cheers man been a big help!
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    (Original post by jacklutty1)
    pretty much what is asked in the title, need to know all about it, all the nitty gritty, how it links to economics, will be very thankfull!
    What do you mean?
 
 
 
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