BSA – A1C : Group 6

LACSAMANA, Shanelle Rae

MAPALAD, Laurence
ORANTIA, Sharis Rapunzel
SANCHEZ, Jade
TEOFISTO, Rikki Mae

1. Who is John Maynard Keynes and why is he considered as the Father of Macroeconomics?

John Maynard Keynes was born in 1883 who grew up to be an economist, journalist and financier.
He was also a British economist who founded Keynesian economics, which address the causes of
long-term unemployment. He advocated himself in focusing on preventing economic recession
by voicing out through full employment and government intervention – increase the spending
and lowering the taxes to stimulate demand in the face of recession. Keynes’ career covered
academic roles and government service. His theories have proven real contribution in
reconstructing of economical values. His interests were constructed with the helped of individuals
which was about active stance on proposing post-war monetary funds, reparation and
reconstruction funds of Germany. Through his different opportunities, he developed theories
which is vital to establishing economies. These were only some of the reasons that made him the
"Father of Macroeconomics".

2. Discuss the main differences between Classical and Keynesian Economics. How differently do
they see the role of the government in the economy?

Classical Theory in economy presents economy as self-regulating. It states that an economy is able
and has the capacity to achieve the real GDP and in result is a fully employed economy. In the
time of fluctuating circumstance, self-adjustment mechanism exists in bring it back to the natural
level of real GDP. While in Keynesian Theory in economy states that the government should play
the part to increase the demand to boost growth. In this theory they believe that the consumers
are the primary force that drives the economy. This theory is in favor of expansionary fiscal policy.
Which focus on the government spending on infrastructure, unemployment benefits and
education. The downfall of the Keynesian Theory is that overdoing it may result to inflation.
In terms of Government role, the classical Theory do not believe in high spending of the
government. They believe that the government should balance the budget while in Keynesian
they approved Government’s borrowing because they believe that government spending
increases, it also increases the demand in the economy.

3. Describe briefly the Great Depression in the 1930s and its connection to the study of the field
of macroeconomics.

The Great Depression was considered as the greatest and longest economic recession in the
modern world history. This started in 1929 when the US stock market crash and did not even end
after the World War II. During the Great Depression, it is said that the worldwide GDP fell by
approximately 15%. Thus consumers were forced to cut back their expenditures that’s why some
 goods and supplies were just stocked in the markets and many lost their jobs due to corporate
profits declining over 90% which result to high unemployment rate, interest rates also dropped
low and people were reluctant to borrow money thus spending and investments became
depressed.
This economic recession is considered as a great challenge and has a great influence in developing
macroeconomics concepts. This resulted to the birth of new theories, researches and
recommendations from economic analysts. This also improved historical analysis as well as,
comparative approach because it is considered as a turning point since The Great Depression did
not only happen in one country but, all over the world.

References
Amadeo, K. (2019, December 16). Keynesian Economics Theory. Retrieved from The Balance:
https://www.thebalance.com/keynesian-economics-theory-definition-4159776

James Chen. (2019, October 1). John Maynard Keynes. Retrieved from Investopedia:
https://www.investopedia.com/terms/j/john_maynard_keynes.asp

John Maynard Keynes: The father of Macroeconomics. (2015, March 22). Retrieved from Bartleby
Research: https://www.bartleby.com/essay/John-Maynard-Keynes-The-Father-Of-
Macroeconomics-F337JCUQKFV85

Woodruff, J., & Reviewed by Michelle Seidel, B. L. (2019, February 12). Differences Between Classical &
Keynesian Economics. Retrieved from Chron: https://smallbusiness.chron.com/differences-
between-classical-keynesian-economics-3897.html

Bernanke, B. (1995). The Macroeconomics of the Great Depression: A Comparative Approach. Journal of
Money, Credit and Banking. The Ohio State University Press. Retrieved from fraser.stlouised.org

Segal T. (2019). What was the Great Depression?. Retrieved from

https://www.investopedia.com/terms/g/great_depression.asp