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Kenysian Policy

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Submitted By nsabon
Words 606
Pages 3
Anthony Sabon
Keynesian Economic Model and Fiscal Policy
In the massive economic crash of 1929, the government did not play such a key role in rebuilding as did in the 50s. With the stock market, and banks going under, people lost their jobs and many were homeless, it was the worst economy the United States has ever seen. The president tried a few tactics and they never really worked, trying to boost consumer spending to create more jobs and boost the economy.

By 1932, the budget was so far out of balance that a revenue bill cut government expenditures and imposed a huge tax increase on the ailing economy. President Hoover authorized the creation of the Reconstruction Finance Corporation, to pump $2 billion in investment money into the economy. This was a major involvement in the economy by the government, but it did not work. When Roosevelt took office in 1933, he took over as a leader of a nation with a quarter of its workforce unemployed. In the first four years, the Roosevelt Administration launched the NRA, the CCC, the WPA, programs to relieve unemployment. Newly employed workers spent more money, creating more jobs. The economy seemed to be rebounding until the stock market took a dive in 1937. Unemployment began to rise again. Roosevelt responded by resuming government spending with a $3 & 3 /4 billion dollar measure.

Not until the Second World War did the US economy rise, when government took a huge part in the economy. They were opening factories to build war machines and weapons, creating countless jobs where many people worked multiple shifts and earned overtime. This in turn boosted spending which opened more shops and helped production rise. The economy was finally back on its feet, and the government promised to never let the US get in that bad of shape again. President Eisenhower took office with an already booming economy but it

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