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Outline two main contributions to economic thought by the economist John Maynard Keynes - Leaving Cert Economics - Question 4 - 2019
Question 4
Outline two main contributions to economic thought by the economist John Maynard Keynes. (i) (ii)
Worked Solution & Example Answer:Outline two main contributions to economic thought by the economist John Maynard Keynes - Leaving Cert Economics - Question 4 - 2019
Step 1
(i) Favoured government intervention
Answer
John Maynard Keynes argued that national income could not reach equilibrium without full employment. He posited that the most effective approach to managing an economy was through government intervention, particularly in the form of fiscal policy. This intervention would stimulate demand and promote economic stability.
Step 2
(ii) The Multiplier Effect
Answer
Keynes introduced the concept of the Multiplier Effect, which suggests that an initial injection of income into the economy leads to a greater than proportional increase in national income. This mechanism is crucial in understanding how public spending can effectively stimulate economic growth and consumer demand.