Economic Theory Essay Example | Topics and Well Written Essays - 250 words

Economic Theory - Essay Example The Keynesian economic theory involves stimulation of the economy to encourage people to spend. This is achievable either through government investment in infrastructure or a decrease in interest rates. An increase in income results in more spending, which results in more production and spending. The cycle continues, as there is more income and the ability to spend more money. In consequence, the original government investment results in a ripple reaction that involves economic activity. Obama is largely a Keynesian economist because of his strategies in economy stimulation. The move by the government to increase money supply, or purchase products in the market by itself is beneficial because it increase spending. The concept of equilibrium in unregulated markets creates a capitalist economy that has several flaws. There is a need to leverage assets by real creation of wealth, which increases economic productivity, instead of through debt. It is evident, following the recent bubble, that reliance on equilibrium is detrimental to economic growth and productivity. The Keynesian economic theory is the best because the government is the only economic actor than can favorably supply credit and demand for economic