Chapter 1: Problem 15

How did John Maynard Keynes define economics?

Short Answer

Expert verified

John Maynard Keynes defined economics as a social science focusing on the allocation of scarce resources to satisfy unlimited wants and needs, with an emphasis on the determinants of employment and income distribution. This perspective highlights the importance of resource allocation, employment, and income distribution, reflecting Keynes's influence on modern economic theory and policy-making.

Step by step solution

Understand John Maynard Keynes

John Maynard Keynes (1883-1946) was a British economist who profoundly influenced the theory and practice of modern economics. He played a significant role in the development of macroeconomics and the economic policies of governments. His ideas were formulated during the Great Depression to foster economic growth and stability, and thus became the basis of a new economic theory called Keynesian economics.

Keynes's Definition of Economics

According to John Maynard Keynes, economics is defined as a social science studying "the administration of scarce resources and the determinants of employment and income distribution, insofar as they result from the behavior of wealth and prices". In simpler terms, Keynes defined economics as the study of how societies allocate scarce resources to satisfy unlimited wants and needs, with a focus on factors that influence employment and income distribution.

Understanding the Definition

Keynes's definition emphasizes the scarcity aspect, as resources are limited while wants and needs are infinite. He highlighted the importance of studying how society could best allocate these limited resources to maximize well-being. Furthermore, Keynes was particularly interested in how employment and income distribution are affected by various economic factors, as these issues were central to his own economic theory.

Conclusion

In conclusion, John Maynard Keynes defined economics as a social science that studies the allocation of scarce resources to satisfy unlimited wants and needs, with a particular emphasis on the determinants of employment and income distribution. This reflects Keynes's focus on the broader aspects of the economy, which significantly influenced modern economic theory and policy-making.

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