The Keynesian Fiscal Policies

Subject: Politics & Government
Pages: 2
Words: 328
Reading time:
2 min

The Keynesian theory put forward that a nation prospers not because of the physical assets but because of the revenue they get. The income is the whole amount of the income the population of the country receives. This can be evaluated by the working money in a countries economy that is the money in circulation. The money that is used for purchasing and sales is used to measure the amount of the country’s income. When production is high, job are many and therefore the economy also rises.

Savings are supposed to be invested and not left to stay in the bank. This will curb depression in the economy. Savings and investments have some inverse relationship. The other affect another in that when savings rise then investment goes down and vice versa. When savings have increased the condition of depression occurs in a country’s economy. The government should therefore ensure that the money is always invested as per this theory in order to maintain the economic status.

Keynes explains that for a nation or rather a government to be prosperous it should venture more on investments since increased saving leads to inflation. The government should be involved in huge investments in order to enhance its economy. The economy must always go up to reduce depression. The government should therefore employ this theory in order to enhance its economy. Obama should ensure that its population are all employed and hence increasing the national income and eventually improving the economy.

Keynes tried to eliminate capitalism which caused unemployment and hence economic depression. Investments can be in terms of bonds and in stocks and even policies. Savings should always be put under work and should not remain idle. When money is used production increases and therefore increases hob opportunities. In this case, most of the people in the country have income which collectively increases the national income.