Global Crisis: The Keynesian Model

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Since the Great Depression different macroeconomic models approach that has been established. It can be questioned and which culminated unsuccessfully face some failures in the various economic crises. In the other hand, strategic solutions applied by the G8 May 19th 2012, which have met to find solutions to overcome the global crisis valid for North America and for the EU. The essay will tend to talk also about the support from the Federal Bank and the European Central Bank that plays a key role, created new tax policy measures; furthermore let’s analyze the devaluation of the European currency under the influence of the Monetary Union and the impact of household debt on consumption and production. And finally we will conclude with the strategy…show more content…
It means in Keynesian system that anyone with money income can at the same time spend this sum equal. Similarly any expenditure by a person can result in equivalent income to another person. In any case, only the expenditure may create a monetary income. In clear, every level of national income corresponds to a volume of employment. Higher is the national income, better will be the quantity of employment. Indeed, people will get higher income, which will represent only a rise in prices, without any rise of physical output and employment. Keynes supported that the solution to depression was to push people to invest in order to stimulate the economy with approach: Interest rates lower and infrastructure investment from the…show more content…
But both of them have a different approach of the problem due to their different capabilities and both persist to respond with monetary policy actions, namely to maintain a share price stability and achieve growth. The Fed for example, is focusing on a quantitative easing policy, which is based on the purchase of large quantities of Treasury bond but also mortgages always aiming to lend a small part to the banks. On the other hand, the ECB has largely liquidity loans to banks and investing less on government securities.

In the Global Crisis, there is a clear difference between European markets and American market situation. Despite their different approaches to the subject, United State can be seen as a homogenous market and Europe as a heterogeneous market because they have differences in their theoretical foundations of their policies and the institutional, and also about their structural characteristics of the part of their

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