MANHATTAN PROJECT

Final project-writing 1st draft

Andres Sagarnaga
Maria Jesus Torrejon
Leonardo Valencia

ESSAY– FINAL PROJECT

PARAGRAPH 1- Introduction

Keynesianism is an economic theory that is based on government intervention in the

economy to achieve macroeconomic stability. This theory was developed by the
British economist John Maynard Keynes during the Great Depression of the 1930s,
when capitalism was in a deep crisis. We will see how this crisis could be solved,
and how this theory even being very efficient for economic crises, can have some
mistakes.

PARAGRAPH 2- problem statement

Keynesianism emerged as a response to the Great Depression of the 1930s and it

was developed by the British economist John Maynard Keynes. John Maynard
Keynes (1883-1946) was an influential British economist whose ideas transformed
economic theory and politics during the 20th century. His best-known work, "General
Theory of Employment, Interest and Money" (1936). The Great Depression of 1930
was characterized by a massive decline in industrial production, rising
unemployment, falling incomes, and a fall in the stock market. That is why Keynes
created the theory to get out of that crisis.

PARAGRAPH 3- Central Ideas of Keynesianism

Keynesianism is the theory that states that the State must intervene in the economy
to maintain balance and reverse crisis cycles. He proposes that economic policy is
the best tool you can have in a crisis to stimulate aggregate demand. Through fiscal
policies, Keynes establishes that there must be an increase in public spending, and
a reduction in taxes to boost individual consumption. While monetary policies will be
in charge of reducing interest rates and increasing the money supply by printing
more money. All of this is in order to reduce inflation and increase consumption and
investment.

PARAGRAPH 4- Opinion about the position

Keynes had been right in some parts of his theory, but there was wrong in others.
From our point of view, Keynesianism can be effective in specific situations, such as
in times of regression, because it can help stimulate the economy, and improve
employment and people's quality of life. However, excessive use of Keynesian
policies can lead to an increase in public debt and inflation in the long run. The public
debt is one of the biggest problems since in the long term it would never be covered.
Due to the different loans that would be made in the long term, causing
unemployment to return as well.

PARAGRAPH 5- Conclusion

In conclusion, Keynesianism has left a lasting impact on economic theory and

policies. John Maynard Keynes' ideas on the need for government intervention to
pass economic crises and increase aggregate demand have influenced the
economic policies of numerous countries. That’s why Keynesianism nowadays is
being applied in many countries as a main economic model.