John Maynard Keynes contribution to macro economics Term Paper

John Maynard Keynes contribution to macro economics - Term Paper Example all in all these higher up theories he made when launching his book in 1936 the general theory of employment, money and interest. Keynes believed that the classical approach to macroeconomics was erroneous and had been interfered with by the outbreak of military man war one. He also believed that the classical approachs belief that the balance between supply and demand would ensure employment for everyone was false. This was pay backd by deficient investment and the psychology held by many people about saving. People had forethought of investments due to the looming uncertainties caused especially by the war. The classical approach had thus bountiful absurd and this is why John Keynes embarked on the project to come up with new economic theories to save the situation. The solution that Keynes brought to the above problem of the private fear of investment was to bring in public investment from the government albeit on deficit spending. This would in turn create jobs and soon the government would pay reach their debts. This therefore laid a foundation for macro- economics as it viewed the entire economy as one focusing on the governments fictitious character in the economy as a whole. His research helped come up with ways that were used to measure an economys productivity. ... How Keynes went against says lawfulness Jean-Baptiste Say, a French man had earlier come up with a theory of his have. This theory stated that it is impossible for supply to outrun demand as supply is brought about by demand any way, which was part of one of the classical approaches to macro-economics that tried to explain the reasons behind recessions and depressions. Say stated that the main cause of a glut (overabundance of a product in the market) is the producers illiteracy on the nature of the demand. Another scholar - David Ricardo, furthered this argument to state that recessions ar caused by overprod uction of goods that are not what the customers wanted. Goods are therefore not sold because the goods produced are not what the customers wanted. Customer satisfaction is a key chemical element in matters production therefore, a product cannot be bought if it does not satisfy customer requirements. Keynes misinterprets Says law by saying that supply creates its own demand this in essence interprets the law to state that whatever will be produced will be consumed which is not the case. Keynes omits the fact that in order for gather supply to meet the aggregate demand, the goods supplied must be those that are demanded by the market. This is how Keynes basically went against Says law. Keynes therefore, in his book the general theory states that deficiencies in demand are the main cause of economic recessions. The great misinterpretation of Keynes in Says laws was what created his legacy up until more economists came up and deduced the above as they made his theory not hold anymore. Economists nowadays have thrown almost all of Keynes theories out of the window and