1. Keynes and Hayek
Gaëlle and Rachel

2. John Maynard Keynes
Friedrich Hayek

3. How these two economic models explain the full employment

4.  Keynesian concept of employment has three conditions:
reduction in the real wage rate
increase in effective demand
 Inelastic supply of output at the level of full employment

6. How these two economic models explain the 1930’s crisis

7. Hayek’s theories: The boom is only an illusion
Crises are due to lax monetary policy
Have to liquidate everything to relaunch the country’s production
Quantitative easing is a bad idea

8. Keynesian theories : No automatic forces
A level of « under-employment equilibrium »
It’s the government’s job to increase its spending not the population

9. Why the 2007/08 crisis is bringing back Keynesian theories back to life

10. Demand of goods declines Businesses see their sales fall off
They cut back production
They fire employees
Unemployment rises

11. paradox of thrift:
an increase in autonomous saving leads to a decrease in aggregate demand and thus a decrease in gross output which will in turn lower total saving