WHAT CRITICISMS FACE KEYNESS THEORY?
Since Keynesian economics was created during a post war economy, many criticisms have been made about its influence on stabilizing today’s economy. In the 1970s, high unemployment and inflation were the economic concerns for the United States. Keynes’s theory was based on inflation caused by excess general demand and not with increases in individual commodities. This change in consumption altered the way Keynesian economics was read. The major criticism that Keynesian economics received was that it led to the other extreme, inflation. For one, increased employment beyond a certain point would cause a rise in prices. Second, the theory eliminated major depressions, but took the blame for inflation. Third, the government’s response to the economy’s needs took to much time. Finally, one major criticism of Keynes’s theory is that he failed to show that equilibrium could be maintained at less that full employment.
