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Keynesianism MK, Unit 23. Reading p. 117 Read the text and underline the main ideas connected with classical economic theory, Keynesianism, and Monetarism.

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Presentation on theme: "Keynesianism MK, Unit 23. Reading p. 117 Read the text and underline the main ideas connected with classical economic theory, Keynesianism, and Monetarism."— Presentation transcript:

1 Keynesianism MK, Unit 23

2 Reading p. 117 Read the text and underline the main ideas connected with classical economic theory, Keynesianism, and Monetarism. Do the comprehension exercise on p. 118.

3 Fill in the gaps In the long run, excess savings cause interest rates to ___ and investment to ___ again. – classical economic t. The ___ is self-regulating. –classical economic t. ___ intervention in the economy is necessary to ___ the business cycle. – Keynesianism Market forces could produce a durable equlibrium with ___ unemployment, ___ goods, ___ rates of income and investment. – Keynesianism Governments shouldn’t ___ with the economy. Their only job should be to ___ a constant non-inflationary ___ in the money supply. - Monetarism ___ the money supply will only lead to inflation. - Monetarism

4 Fill in the gaps In the long run, excess savings cause interest rates to fall and investment to increase again. – classical economic t. The economy is self-regulating. –classical economic t. Governmental intervention in the economy is necessary to counteract the business cycle. – Keynesianism Market forces could produce a durable equlibrium with high unemployment, fewer goods, reduced rates of income and investment. – Keynesianism Governments shouldn’t interfere with the economy. Their only job should be to ensure a constant non-inflationary growth in the money supply. - Monetarism Increasing the money supply will only lead to inflation. - Monetarism

5 The subprime ciris and the credit crunch MK, Unit 14

6 What are these? Find the corresponding term in the reading. (MK, p. 75) People who are unlikely to repay their loan. – subprime borrowers /people with a high risk of default A security, that an investor would buy because (s)he wants to get a regular income from people who are paying off the mortgage on their houses. – MBS and CDO When I bought my house, it was worth $300.000, house prices fell, it is now worth $90.000! – the debt is greater than the value of the house

7 Video – Watch this at home too!!! http://www.crisisofcredit.com/

8 HW Reader, p. 32-35


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