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Smith vs. Keynes: The Battle for Economic Supremacy

Smith vs. Keynes: The Battle for Economic Supremacy. Let’s Get Ready to Ruuuuuuuuumble !. VS. Tasks, Conditions, Standards. TASK: You will be able to: compare and contrast Keynesian and classical economics. analyze the historical context of both theories.

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Smith vs. Keynes: The Battle for Economic Supremacy

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  1. Smith vs. Keynes:The Battle for Economic Supremacy Let’s Get Ready to Ruuuuuuuuumble! VS

  2. Tasks, Conditions, Standards TASK: You will be able to: compare and contrast Keynesian and classical economics. analyze the historical context of both theories. critique the flaws of either approach. CONDITION: Given a classroom environment with highly motivated students who are ready to learn.

  3. Tasks, Conditions, Standards • STANDARDS: • D.12.6 Use economic concepts to analyze historical and contemporary questions about economic development in the United States and the world • D.12.12 Compare and contrast how values and beliefs, such as economic freedom, economic efficiency, equity, full employment, price stability, security, and growth, influence decisions in different economic systems • CCSS.ELA-LITERACY.RH.11-12.2 Determine the central ideas or information of a primary or secondary source; provide an accurate summary that makes clear the relationships among the key details and ideas. • CCSS.ELA-LITERACY.RH.11-12.8 Evaluate an author's premises, claims, and evidence by corroborating or challenging them with other information.

  4. Smith: the Father • Wrote “Wealth of Nations” in 1776 • Death of Mercantilism • Advocated for Laissez-Faire system of government • Belief in the “Invisible Hand”

  5. Keynes: The (Prodigal) Son • Active during the 1920s and 1930s • Advocated for active government intervention in the economy • Countercyclical monetary policy • Economies that run on debt • GDP Growth!!!

  6. Application Today Smith keynes • Classical or “monetarist” policy • Austerity: raise taxes, reduce government spending to reduce deficits • Common in Europe, but not popular • Also seen in the United States • Known as “Keynesian” economic policy • Countercyclical: reduce government spending during growth, increase during recession • Tendency to create or increase massive government debt • Usually includes “stimulus”

  7. Check On Learning For each example, determine if the action is classical or Keynesian. In 2009, Greece closes down its state-owned television stations to try to reduce government spending. The government of France buys 20,000 wheels of French cheese in a bid to prop up the stinky cheese industry during a downturn.

  8. Check On Learning The United States Congress passes tax cuts that leave an extra $500 in each taxpayer’s pocket during a recession. Wisconsin raises sales tax to 14% and cuts all funding for public schools to balance the budget. The Federal Reserve sells an extra $30 billion worth of bonds during a period of sustained economic growth.

  9. Questions?

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