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Economics can be described as the subject which focuses on ways through which individuals decide upon things when they are facing scarcity. These decisions can be regarding one’s own self, family related, related to society or related to the business. The economy is a vast field and we will be focusing on certain significant topics of this subject. We will be shedding light on the Keynesian economists, economic theory and the multiplier effect.
Keynesian Economists
John Maynard Keynes can be called the individual from whom the Keynesian economists get their name, their ideas, theories, and principles. John Maynard Keynes (1883 – 1946) was a British economist. He is considered to be the modern macroeconomics’ father.
Keynesian Economics can be called a part of the macroeconomic theory which focuses on the overall expenditure in the economy and the total impact it can have on price increases, output and employment. This kind of economics can be considered as the ‘demand-side’ theory which attends to fluctuations in the economy over a brief period of time. ‘Depression economics’ is also a way through which often Keynesian Economics is referred to. Keynesian Economics mainly is focused on the use of active government policy to control collective demand so as to address or avoid economic slumps.
Economics Theory
Economics is a subject that can hold significant value in our day to day life. The theories in economics help in understanding the ways through which several diverse economies work. Based on the specific function an economist can use theories for differing uses. To understand this better, one can see how some theories focus on demand and supply while some others may focus on analysis, interpretation and prediction of the behaviour of the financial markets, governments and industries. Here are certain basic types of economic theories which help us in learning more about economics as a subject as well as about the life that we are a part of, these theories can be related to Keynesian economics, supply and demand, classical economics, Malthusian economics, Marxism, Laissez-Faire capitalism, Market Socialism, Monetarism, Tragedy of the Commons, Moral Hazard Theory and New Growth Theory. Each theory helps in learning something more about economics as a subject and gaining knowledge about the world that we are a part of.
Multiplier Effect
During the times when an early shot into the economy leads to a better concluding enhancement in the national income is when the fiscal multiplier effect takes place. To understand this in terms of the formula, one can say that:
Multiplier (k) = Change in the real GDP (Y) / Change in injections (J)
According to the Keynesian views on the multiplier effect, it can be inferred that the private sector is having a glut of non-productive savings, characteristically, consequently, there is limited crowding out effect and thus, there shall be a positive multiplier effect.
Conclusion
As an observed form, the above discussion, the concept related to how economics plays an important role in society can now be clearly understood. Apart from the significant role of economics in society, some other topics such as Keynesian Economists, economics theory and multiplier effect were also studied. As observed from the above sections John Maynard Keynes can be called as the individual from whom the Keynesian economists get their name, their ideas, theories, and principles. Then the diverse theories that can be studied under economics were also mentioned. The concept regarding the multiplier effect and the formula for understanding it better is also mentioned above. Thus, it can be concluded that in an aggregate manner a lot of significant topics regarding Economics have been covered above in a comprehensive manner.
