Summary-Response
From the work of Keynes, he argues that if the economy investments are more than the savings, the economy will experience inflation.
On the other hand, if savings exceed investments, it will lead to a recession. The author believed that increased spending would reduce unemployment and help the economy recover. The author explores the economy and the significant challenges facing the economy. He claims that the prosperity of a nation can be measured through the earnings of individuals. For example, he narrates that when individuals enjoy high incomes, the country is in a better position, and when the total income goes down, then the nation is at a depression. The primary feature of an economy is the flow of income from one hand to the other (Heilbroner 266). The primary cause of unemployment is the lack of expenditure within an economy, leading to a decrease in aggregate demand. Additionally, the economies are enhanced when there is a substantial amount of output, which is driven by sufficient amounts of economic expenditure. Decreased spending leads to an increase in unemployment.
In my opinion, I support the author’s argument of unemployment, whereby the author states that reduced spending will lead to an increase in the rates of unemployment. Additionally, the concept of saving outlined by the author stands to be significant to every economy. The author claims that a saving economy will remain standing in the times of depression and that a decline in saving will lead the economy to a condition of paralysis when it is expected to be dynamic (Heilbroner 280). More importantly, his argument that the best way to get an economy out of recession is by the government borrowing money and raise the demand by infusing the economy with more capital to spend is valid.