Keynesian theory, what is the basic framework of Keynesian theory?

Keynesian economicsKeynesian followers, such as British economists.

Harold, Robinson.

Hicks, American economists Hansen, Samuelson and others, adhered to Keynes's basic ideas and made many important developments in theory and policy. These are also Keynesian economics.

important components. These basic frameworks of thought mainly include:

Clause. 1. Use the IS-LM model to explain Keynes's theory of national income determination.

Clause. Second, the acceleration principle is used to supplement the multiplier principle, and the two are combined to analyze the economic cycle.

Clause. 3. Supplement Keys's consumption function theory - the absolute income hypothesis with the relative income hypothesis, the life cycle hypothesis and the persistent income hypothesis.

Clause. Fourth, Keynes's theory of national income determination has been made long-term and dynamic, and various growth models have been put forward to explain the problem of economic growth.

Clause. Fifth, the development of investment theory analyzes the various factors that affect investment.

Clause. 6. The development of monetary theory.

Clause. 7. Establishment of macroeconomic econometric modeling.

Clause. 8. The aggregate supply theory is used to supplement the aggregate demand analysis, and the "aggregate demand-aggregate supply model" is established.

Clause. 9. Expand Keynes's closed economic analysis into an open annihilation economic analysis.

Clause. 10. The concretization and development of economic policies, etc.

1. The law of diminishing marginal consumption tendency; 2. The law of diminishing marginal efficiency of capital; 3. Flow preference law. The law of diminishing marginal propensity to consume refers to the fact that as residents' income increases, their consumption will increase correspondingly, but in the increased income, the proportion of the part used for consumption is getting smaller and smaller, and the proportion of the part used for saving is increasing.

First, the law of decreasing marginal consumption tilting posture.

First, the marginal propensity to consume refers to the change in consumption caused by each additional unit of income. mpc=∆c/∆y

In economics, C stands for Consumption, the first letter of consumption, the English word for consumption; The English word for income - income, because i is the same as investment, so in order to distinguish between the two, it is believed that y represents income).

Marginal propensity to consume is diminishing, which means that although people's consumption increases with the increase in income, less and less of the increased income is used to increase consumption. As income increases, consumption does not increase in the same proportion, and the difference is saving. The more income increases, the smaller the share of consumption in income and the greater the savings.

In general, the marginal propensity to consume fluctuates between 0-1.

Second, the law of diminishing marginal utility.

In a certain period of time, under the condition that the consumption of other goods remains unchanged, as the consumer's consumption of a certain commodity increases, the increment of utility that the consumer gets from each consumption unit of the commodity that has continuously increased, that is, the marginal utility, is decreasing.

Utility: refers to people's evaluation of the ability of goods or services to satisfy their desires, that is, the degree of satisfaction that consumers feel when consuming goods or services).

The law of diminishing marginal returns (also known as the law of diminishing marginal returns).

All other things being equal, if an input factor increases continuously and in the same amount, after increasing to a certain output value, the increment of the product provided will decrease, and the marginal output of the variable factor will decrease.

3. The law of flow preference.

Keynes's theory of the demand for money, which he believed stems from people's preference for liquidity. People are motivated by the following three types of motives for money.

First, transactional motivation refers to the fact that individuals and businesses need money in order to conduct normal trading activities.

Second, the prudent or precautionary motive refers to the motive to hold a portion of the currency in order to prevent unexpected spending.

Third, speculative motivation refers to the motivation of people to hold a portion of currency in order to seize a favorable opportunity to buy valuable money.

Summary. Keynesianism argues that the spontaneous market mechanism of converting savings into investment through interest rates and regulating the supply and demand of labor with the help of changes in wages does not automatically create the level of effective demand required for full employment; In the competitive private system, the "three psychological laws" (diminishing marginal propensity to consume, diminishing marginal efficiency of capital, and preference for mobility) make effective demand tend to be lower than the aggregate supply level of society, resulting in employment levels always in an equilibrium state of underemployment. Therefore, to achieve full employment, traditional laissez-faire policies must be abandoned and active fiscal and monetary policies must be applied to ensure sufficient levels of effective demand.

Keynes's most fundamental theoretical innovation is to provide a set of economic justifications for state intervention in the economy, which no economics could have done before the advent of Keynesianism.

Keynesianism argues that China's spontaneous market mechanism, in which savings are converted into investment through interest rates and labor supply and demand is regulated by changes in wages, does not automatically create the level of effective demand needed for full employment; In the competitive private system, the "three psychological laws" (diminishing marginal propensity to consume, diminishing marginal efficiency of capital, and preference for mobility) make effective demand tend to be lower than the aggregate supply level of society, resulting in an equilibrium state of underemployment. Therefore, to achieve full employment, traditional laissez-faire policies must be abandoned and active fiscal and monetary policies must be applied to ensure sufficient levels of effective demand. Keynes's most fundamental theoretical innovation is to provide a set of economic justifications for state intervention in the economy, which no economics could have done before the emergence of Keynes's blind and boring doctrine.

Keynesian economics or Keynesianism is based on the ideas of Keynes's book "The General Theory of Employment, Interest and Money" (Keynes, 1936), which advocates that the state adopt an expansionary economic policy to promote economic growth by increasing demand. Keynes's economic theory held that macroeconomic trends would constrain the specific behavior of individuals. "Political economy" or "economics" since the late 18th century has been based on the continuous development of production to increase economic output, while Keynes believed that the decline in aggregate demand for goods was the main cause of the recession.

From this point of view, he believes that measures to maintain the overall balance of economic and economic activities can balance supply and demand at the macro level. Therefore, Keynes's and other economic theories based on Keynes's theory are called macroeconomics, to distinguish them from microeconomics, which focuses on the study of individual behavior.

Summary. Hello! Keynes's Basic Theoretical Framework and Summary of Keynes's Law Keynes's National Income Determination Theoretical Consumption (C) Investment (I) Propensity to Consume Income Average Propensity to Consume apc= Marginal Propensity to Consume MPC= From this to find the theory of investmentK= Interest Rate (R) Marginal Efficiency of Money (MEC) Liquidity Preference (L) Number of Currencies Motivation to Deal Prudent Motivation Speculative Motivation Expected Returns (r) Replacement Cost or Supply of Assets** Basic Content of Keynes's Theory National income determines consumption and investment.

Consumption is determined by propensity to spend and income. The propensity to consume is relatively stable. Investment is determined by profits and marginal efficiency of capital, and investment changes in opposite directions with interest rates and in positive directions with marginal efficiency of capital.

Interest rates are determined by liquidity preference and the amount of money. The marginal efficiency of capital is determined by the expected return and the supply of assets** or replacement cost. Mathematical Model l=l1+l2=ky-hrm p=m=m1+m2 The knowledge context diagram of this chapter is-lm framework is curve lm curve is curve is curve push to is curve movement two departments:

r= three departments: r= three departments: y=,t).

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Hello! Keynes's Basic Theoretical Framework and Summary of Keynes's Law Keynes's National Income Determination Theory Consumption (c) Investment (i) Propensity to Consume Income Average Propensity to Consume apc= Marginal Propensity to Consumempc= From this, the theory of investment is obtained k= Interest rate (r) Marginal efficiency of money (mec) Liquidity preference (l) Number of currencies Trading Disturbances Prudential Motivation Speculative Motivation Expected Returns (R) Replacement of Mitigation Costs or Supply of Assets** Basic content of Keynes's theory National income determines consumption and investment. Consumption is determined by propensity to spend and income.

The propensity to consume is relatively stable. Investment is determined by profits and marginal efficiency of capital, and investment changes in opposite directions with interest rates and in positive directions with marginal efficiency of capital. Interest rates determine the disadvantages of liquidity preference and the amount of money.

The marginal efficiency of capital is determined by the expected return and the supply of assets** or replacement cost. Mathematical Model L=L1+L2=ky-HRM P=M=M1+M2 Knowledge Context Diagram in this Chapter IS-LM Framework IS Curve LM Curve IS Curve Push to IS Curve Movement Two Departments: R= Three Departments:

r= three departments: y=,t).

Background 1: Capitalism has an economic crisis. It is manifested in overproduction, enterprises suspending production and upgrading to purification, workers are unemployed, and the economy is depressed. 2. The proletarian revolution was victorious.

Marx smiled and brought the Communist Manifesto and founded the First International. Lenin led the socialist revolution to victory. 3. The bourgeois classical economic theory is bankrupt.

Smith advocated that the invisible hand regulates the economy, causing production to be in a state of inactivity, leading to an economic crisis.

Content: The core of this theory is the theory of insufficient effective demand. The theory holds that the root cause of the economic crisis and underemployment in capitalist countries lies in the lack of effective demand caused by insufficient private investment and consumption.

This theory advocates that the state adopts expansionary economic policies that promote economic growth by increasing aggregate demand.

Keynes, one of the most influential pre-scripture economists in modern Western economics, called his macroeconomics, along with Freud's psychoanalysis and Einstein's theory of relativity, known as the three major revolutions in human knowledge in the twentieth century.