The General Theory Of Employment, Interest, And Money

In the renowned work, The General Theory of Employment, Interest, and Money John Maynard Keynes breaks down his general theory of mercantilism and free trade into seven different section. Each section talking about his opposition to economic theorists and his views on the advantage of having an adaptable and well prepared system to maintain an efficient economy. In his first argument he starts off by explaining how â€Å"for the past one hundred years there has been a remarkable divergence of opinion† between practical men and economic theorists (Chapter 23, I). Unlike the economic theorists the practical men favor mercantilism, an economic system set around strict government regulations in order to unify a nation in hopes to increase monetary†¦show more content†¦Which states that most new investments are either home investments, which can eventually be governed, or foreign investment, which is determined by balance trade. The two investments together make up aggregate investment, which is the sum of all expenditures on investment. As he moves on he argues that â€Å"If the domestic rate of interest falls†¦the increase in the domestic level of costs will begin to react unfavorably on the balance of foreign trade† (Chapter 23, II). Causing an influx in a country’s increasing costs and falling rates leads to another country’s fall in cost and rise in rates. Mercantilists who were accused of opposing trade restrictions later realized that favorable balance of trade was more efficient. However, Keynes makes a great argument in that he states that â€Å"the fact that the advantage which our own country gains from a favorable balance is liable to involve an equal disadvantage to some other country† (Chapter 23, II). So it is important that economists and government officials make better and educated decisions that helps maintain a nations economy. The third and fourth section of Keynes’ argument brings up multiple references to other economists and professors on their views of mercantilism. In his reference to an article from Professor Heckscher, who believes that the mercantilists policy â€Å"killed two birds with one stone† (Chapter 23, III). Keynes saw the flaw inShow MoreRelatedThe General Theory Of Employment, Interest, And Money.1653 Words   |  7 PagesThe General Theory of Employment, Interest, and Money Background information about the Author John Maynard Keynes was born in Cambridge, England in 1883 (Bateman, Toshiaki, Maria, 2010). He was the first born in a family of three children. He spent most of his toddler years in Cambridge where he attended kindergarten. In 1889, he attended his first kindergarten lessons at Perse School for Girls where he was supposed to attend lessons for five days a week. At the initial stage of education, he showedRead MoreGeneral Theory Of Employment, Interest And Money2303 Words   |  10 Pagesmacroeconomic. Compared to microeconomics, macroeconomics is a wider branch of economics. In 1936, macroeconomics emerged as a separate division of economics with the publication of John Maynard Keynes’ revolutionary book â€Å"The General Theory of Employment, Interest and Money†. In the study of microeconomics, it is examined how individual units, whether they be households or firms, come to a decision on how to allocate resources and whether those decisions are appropriate. On the other hand, in macroeconomicsRead MoreKeynes Macroeconomic Theory Essay1181 Words   |  5 Pagesyears of the industrialization era modern economics began to see a change and shift of ideas. These ideas were brought to the front by John Maynard Keynes, who in 1936 transformed much of the modern economics by a single book The General Theory of Employment, Interest and Money. 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