The important question is “How much our government should be involved within our economy? ” and “How much involvement should we the people allow? ” It is surly evident that the economy as a whole needs a referee to control and set rules for a healthy and stable economy for tomorrow. The founder of Keynesian economic theory was John Maynard Keynes. The theory is based on the concept that in order for an economy to grow and be stable, active government intervention is required. Also that monetary policy is the best method of ensuring economic growth and stability.
The Keynesian Economic viewpoint differs from the supply-side economic views in many different ways. Keynesian’s state when spending increases, the economy increases a direct correlation between the two creates a balance. Keynesians also believe that with government spending the economy will benefit from the spending. The involvement of the government in the economy will over all increase our economic standing. A supporter of Keynesian economics believes it is the government’s job to smooth out the bumps in business cycle. In addition, the supply side view is very different.
The theory behind the supply side view is that the reducing percentage of tax rates for wealthy individual’s increases savings and investments, which in the end benefit everyone. This also benefits the economy by making it healthy. It is stated by many that, with the tax rate cuts the wealthy will unleash an “avalanche” of new investments and spark economic growth. According to supply-side economics, consumers will then benefit from a greater supply of goods and services at lower prices. Typical policy recommendations of supply-side economists are lower marginal tax rates and less regulation.
As, for me I believe that the Keynesian economic theory is the most logical. The reason why is because I think the more you spend is the more money you make when the economy is doing well. Also, Keynesianism holds that a country should adopt expansive economy policy and enhance economy growth through increasing the aggregate demand. On the other hand, Supply Side economics supports higher taxes and less government spending to help economy. To me this is absurd because, if the country isn’t spending it’s not gaining anything and there’s no way the economy can benefit from this.