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Keynesian economist believe that:

June 13, 2012

full employment can be achieved only with active (monetary) policy.


From → Economics

  1. Aram permalink

    Monetary or fiscal?

  2. Both an active monetary and fiscal policy are probably necessary to achieve full employment and that appears to be what John Maynard Keynes advocated. I wrote down monetary years ago as it may be less obvious or maybe I just kept forgetting it. This is a personalized collection not the sum of all knowledge necessary to pass the Level 1 CFA exam. Lowering Interest Rates is less obvious how it helps the common working man, but it acts as signal to banks to lend to their customers. Some of this money may end up in new projects and new hires. Fiscal policy particularly infrastructure projects which Keynes advocated during the Great Depression directly leads to the creation of low skill jobs and higher employment. Active Monetary Policy is less obvious, thus why it probably got a flashcard. Keynes advocated spending and going into debt to stimulate the economy something FDR followed.

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