Research Paper on:
Theories of John Maynard Keynes

Unformatted Sample Text from the Research Paper:
full employment but it was actually their obligation to create taxing and spending policies and to take a proactive role in increasing employment (1993). The idea caught on. Keynes  was a major influence and many governments followed his ideology (1993). Many still do to this day. In fact, in recent times, one sees calls for the government to help  the economy by extending unemployment and lowering taxes to stimulate the economy. At the same time, modern monetarists hold that the quantity theory of money is valid and  the key to controlling price levels (McLeish, 1993). Milton Friedman, a monetarist in his own right, contested Keynesian principles (Crawford, 1995). Friedman proposed that the national economy grows at  a natural rate and that government cannot influence it (1995). Thus, in order to foster economic growth, one should try to match the growth of the money supply with  this natural rate (1995). In other words, Friedman based his ideas on the law of supply and demand, but in this theory, the supply of money was the determining factor  (1995). If the money supply would lag behind the long-run rate of growth, the result would be recession (1995). At the other extreme, if it were to expand quickly, inflation  would occur (1995). Today, many conservatives support the monetarist view while liberal thinkers support Keynes. It is important to point out that while Keynes took the view that government  policies could mitigate against cyclical downturns, he did not believe that government policies would eliminate business cycles altogether (Judis, 1997). Still, economists began to argue that government through fiscal or  monetary policy could alter and positively influence downturns in the economy (1997). It is important to understand where Keynes first derived his theories. What was his life like? What prompted