Write a 2 page essay on Government Spending and Taxation, Lessons from the Great Depression and The Economics of Social Security.
1447- 1448)1. Keynes’s theory advocates that higher government spending and curtailment in taxes could be helpful in counteracting the depression (Kindleberger 1986, p. 24)3.
There is no mutual agreement on the idea of what were the main causes of the Great Depression of the USA. Reviewing its core nature, many believe that the severe contraction in early 1930s and later its slow recovery represent that fiscal policy had a minor role in this phenomena. Thinkers have come to this conclusion through theoretical and empirical studies of that period. Theorists say that even though federal government spending had risen considerably, it was not high enough to have a greater impact on the overall economy (Brown 1956, pp. 860 - 861). On the contrary, few economists believe that fiscal policy played a vital role in the emergence of the Great Depression (McGrattan 2011, p 1)4.
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