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    Keynesian Economic Theory & Redistribution of Wealth

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    Redistributing wealth by high taxes and welfare may undermine productivity and restrain a person incentive to work.

    Is distribution of wealth fair and healthy for society?
    Are their ways to redistribute wealth that do not undermine productivity?
    (Just need brief answers one to two paragraphs)

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    Solution Preview

    First of all let us examine the meaning and implications of Keynesian economics. According to wisegeek.com (2010) in Keyne's theory, one person's spendings goes toward anthers earnings, and when that person spends her earnings she is, in effect, supporting another's earnings; this circle continues on and helps support a normal functioning economy. According to this site, for example, when the Great Depression of the 1930s hit, people's natural reaction was to hoard their money; under Keyne's theory this stopped the circular flow of money, keeping the economy at a standstill.

    According to wisegeek.com (2010) since Keynesian economics advocates for the public sector to step in to assist the ...

    Solution Summary

    According to this article, Keynesian economics warns against the practice of too much saving, or underconsumption, and not enough consumption, or spending in the economy; it also supports considerable redistribution of wealth, when
    needed; it states that there is a pragmatic reason for redistribution of wealth.