KEYNESIAN ECONOMICS

Keynesian economics is a theory that says the government should increase demand to boost growth. Keynesians
believe that consumer demand is the primary driving force in an economy. As a result, the theory supports
the expansionary fiscal policy. Its main tools are government spending on infrastructure, unemployment benefits, and
education. A drawback is that overdoing Keynesian policies increases inflation.

The British economist John Maynard Keynes developed this theory in the 1930s. The Great Depression had
defied all prior attempts to end it. President Franklin D. Roosevelt used Keynesian economics to build his famous New
Deal program. In his first 100 days in office, FDR increased the debt by $3 billion to create 15 new agencies and laws. For
example, the Works Progress Administration put 8.5 million people to work. The Civil Works Administration created four
million new construction jobs.

Keynes described his premise in “The General Theory of Employment, Interest, and Money.” Published in
February 1936, it was revolutionary. First, it argued that government spending was a critical factor driving aggregate
demand. That meant an increase in spending would increase demand. Second, Keynes argued that government spending
was necessary to maintain full employment.

Keynes advocated deficit spending during the contractionary phase of the business cycle. In recent years, politicians have
used it even during the expansionary phase. President Bush's deficit spending in 2006 and 2007 increased the debt It also
helped create a boom that led to the 2007 financial crisis. President Trump increased debt during stable economic growth.
That will also lead to a boom-and-bust cycle.

Socialism

Socialism describes any political or economic theory that says the community, rather than individuals, should own
and manage property and natural resources. The term “socialism” has been applied to various economic and political
systems throughout history, including utopianism, anarchism, Soviet communism, and social democracy.

Capitalism
An economic and political system in which private owners control a country's trade and industry for profit.
Marxism
Marxism is a method of socioeconomic analysis that uses a materialist interpretation of historical development,
better known as historical materialism, to understand class relations and social conflict as well as a dialectical perspective
to view social transformation.
Industrial Revolution
The rapid development of industry that occurred in Britain in the late 18th and 19th centuries, was brought about
by the introduction of machinery. It was characterized by the use of steam power, the growth of factories, and the mass
production of manufactured goods.

Information Revolution
Proliferation of the availability of information and the accompanying changes in its storage and dissemination
owing to the use of computers.

Agricultural Revolution
An event that suddenly and dramatically changed life in some way. In politics, revolutions bring about significant
changes in who has power. Regarding agriculture, revolutions are a series of inventions or discoveries that dramatically
shift how we cultivate plants and raise animals.

The name for a series of shifts in human culture and practices that allowed for the invention and improvement of
farming, including crop cultivation and animal husbandry.

Foraging
Foraging is the act of searching for food in the wild. It can involve hunting, fishing, or gathering of plant
matter. Foraging is influenced by the environment and affects the survival and reproduction of animals. Foraging is also a
way for humans to get food, exercise, and vitamin D from nature. Forage can also refer to the food obtained by foraging,
especially for animals that browse or graze.

Urbanization
 Urbanization refers to the process of population shift from rural to urban areas, resulting in the growth of urban
areas. It is closely linked to modernization, industrialization, and the sociological process of rationalization. Urbanization
can describe the proportion of total population or area in cities or towns, or the increase of this proportion over time. The
United Nations projected that half of the world's population would live in urban areas at the end of 2008, and by 2050 it is
predicted that 64.1% and 85.9% of the developing and developed world respectively will be urbanized. Urbanization can
result in deforestation, habitat loss, and the extraction of freshwater from the environment, which can decrease
biodiversity and alter species ranges and interactions. The definition of what constitutes a city changes from time to time
and from place to place.

Overpopulations
Overpopulation is a state where the human population exceeds the carrying capacity of the ecological setting. This
means that the number of people might be more than the available essential materials for survival such as transport, water,
shelter, food or social amenities. Overpopulation can lead to environmental deterioration, impaired quality of life, and a
population crash. Overpopulation results from an increased birth rate, decreased death rate, immigration to a new
ecological niche with fewer predators, or the sudden decline in available resources.

Industrialization
The process of transforming the economy of a nation from a focus on agriculture to a reliance on manufacturing .

Mass unemployment

refers to a situation where a large percentage of the labour force is unable to find paid employment. This can
happen due to a variety of factors, such as a deep economic recession, structural changes in the economy, the effects of
hyper-inflation or perhaps a natural disaster.

There are a variety of factors that can cause mass unemployment. Some of the most common include:

 Economic recessions: When the overall economy is in a downturn, businesses may struggle and may be forced to
lay off workers or reduce their operations.
 Structural changes in the economy: As industries and technologies change, certain jobs may become obsolete
while others may be created. If the number of new jobs being created is not sufficient to replace the jobs that have
been lost, this can lead to mass unemployment.
 Natural disasters: Events such as floods, earthquakes, and hurricanes can disrupt businesses and lead to
widespread job losses.
 Government policies: Government policies can also play a role in mass unemployment. For example, if the
government raises taxes or increases regulations, it can make it more difficult for businesses to operate, which can
lead to job losses. Similarly, if the government cuts funding for certain programmes or industries, it can also lead
to mass unemployment.
 Automation and AI: the fast-paced technological advancements in automation and AI has replaced human jobs
leading to mass unemployment.
 Globalization: As businesses move production to other countries where labor is cheaper, it can lead to job losses
in the country where the jobs were previously located.

Its worth to note that mass unemployment is a complex phenomenon that can be caused by a combination of different
factors.

Neoliberalism
Is contemporarily used to refer to market-oriented reform policies such as "eliminating price controls,
deregulating capital markets, lowering trade barriers” and reducing, especially through privatization and austerity, state
influence in the economy.

Liberalization
Is the process or means of the elimination of control of the state over economic activities. It provides a greater
autonomy to the business enterprises in decision-making and eliminates government interference.

Colonization
 The process of a country taking full or partial political control of a dependent country, territory, or people.
Colonialism occurs when people from one country settle in another country for the purpose of exploiting its people and
natural resources.
The action or process of settling among and establishing control over the indigenous people of an area.

The aim of the Bretton Woods conference was to provide greater global financial stability and enable the movement
of capital to struggling economies and Peace and Security.

IMF

The International Monetary Fund (IMF) is an international organization that promotes global economic growth
and financial stability, encourages international trade, and reduces poverty. It consists of 190 countries and is
headquartered in Washington, D.C.. The quotas of member countries are a key determinant of the voting power in IMF
decisions.

OECD

The Organization for Economic Co-operation and Development (OECD) is an international organisation that
works to build better policies for better lives. Our goal is to shape policies that foster prosperity, equality, opportunity and
well-being for all. We draw on 60 years of experience and insights to better prepare the world of tomorrow.

Together with governments, policy makers and citizens, we work on establishing evidence-based international
standards and finding solutions to a range of social, economic and environmental challenges. From improving economic
performance and creating jobs to fostering strong education and fighting international tax evasion, we provide a unique
forum and knowledge hub for data and analysis, exchange of experiences, best-practice sharing, and advice on public
policies and international standard-setting.

WB
World Bank, international organization affiliated with the United Nations and designed to finance projects that
enhance the economic development of member states. Headquartered in Washington, D.C., the bank is the largest source
of financial assistance to developing countries.

WHO
World Health Organization, an agency of the United Nations, established in 1948 to promote health and control
communicable diseases.

WTO
Created in 1995, the World Trade Organization (WTO) is an international institution that oversees the rules for
global trade among nations. It superseded the 1947 General Agreement on Tariffs and Trade (GATT) created in the
wake of World War II.

The WTO is based on agreements signed by a majority of the world’s trading nations. The main function of the
organization is to help producers of goods and services, as well as exporters and importers, protect and manage their
businesses. As of 2021, the WTO has 164 member countries, with Liberia and Afghanistan the most recent members,
having joined in July 2016, and 25 “observer” countries and governments.

KEY TAKEAWAYS

 The World Trade Organization (WTO) oversees global trade rules among nations and mediates disputes.
 The WTO has been a force for globalization, with both positive and negative effects.
 Big businesses tend to support the WTO for its positive impact on international economic growth.
 Skeptics see it as increasing the wealth gap and hurting local workers and communities.
Understanding the World Trade Organization (WTO)
The WTO is essentially an alternative dispute or mediation entity that upholds the international rules of trade
among nations. The organization provides a platform that allows member governments to negotiate and resolve trade
issues with other members. The WTO’s main focus is to provide open lines of communication concerning trade among
its members.

The WTO has lowered trade barriers and increased trade among member countries. It also has also maintained
trade barriers when it makes sense to do so in the global context. The WTO attempts to mediate between nations in order
to benefit the global economy.

Once negotiations are complete and an agreement is in place, the WTO offers to interpret the agreement in case
of a future dispute. All WTO agreements include a settlement process that allows it to conduct neutral conflict
resolution.

OPEC

OPEC, in full Organization of the Petroleum Exporting Countries, multinational organization that was established to
coordinate the petroleum policies of its members and to provide member states with technical and economic aid.

History of OPEC
When OPEC was formed in 1960, its main goal was to prevent its concessionaires—the world’s largest oil
producers, refiners, and marketers—from lowering the price of oil, which they had always specified, or “posted.” OPEC
members sought to gain greater control over oil prices by coordinating their production and export policies, though each
member retained ultimate control over its own policy. OPEC managed to prevent price reductions during the 1960s, but
its success encouraged increases in production, resulting in a gradual decline in nominal prices (not adjusted for inflation)
from $1.93 per barrel in 1955 to $1.30 per barrel in 1970. During the 1970s the primary goal of OPEC members was to
secure complete sovereignty over their petroleum resources. Accordingly, several OPEC members nationalized their oil
reserves and altered their contracts with major oil companies.

In October 1973, OPEC raised oil prices by 70 percent. In December, two months after the Yom Kippur
War (see Arab-Israeli wars), prices were raised by an additional 130 percent, and the organization’s Arab members, which
had formed OAPEC (Organization of Arab Petroleum Exporting Countries) in 1968, curtailed production and placed
an embargo on oil shipments to the United States and the Netherlands, the main supporters of Israel during the war. The
result throughout the West was severe oil shortages and spiraling inflation (see oil crisis). As OPEC continued to raise
prices through the rest of the decade (prices increased 10-fold from 1973 to 1980), its political and economic power grew.
Flush with petrodollars, many OPEC members began large-scale domestic economic and social development programs
and invested heavily overseas, particularly in the United States and Europe. OPEC also established an international fund
to aid developing countries.

Although oil-importing countries reacted slowly to the price increases, eventually they reduced their overall
energy consumption, found other sources of oil (e.g., in Norway, the United Kingdom, and Mexico), and
developed alternative sources of energy, such as coal, natural gas, and nuclear power. In response, OPEC members—
particularly Saudi Arabia and Kuwait—reduced their production levels in the early 1980s in what proved to be
a futile effort to defend their posted prices.

Production and prices continued to fall in the 1980s. Although the brunt of the production cuts were borne by
Saudi Arabia, whose oil revenues shrank by some four-fifths by 1986, the revenues of all producers, including non-OPEC
countries, fell by some two-thirds in the same period as the price of oil dropped to less than $10 per barrel. The decline in
revenues and the ruinous Iran-Iraq War (1980–88), which pitted two OPEC members against each other, undermined the
unity of the organization and precipitated a major policy shift by Saudi Arabia, which decided that it no longer would
defend the price of oil but would defend its market share instead. Following Saudi Arabia’s lead, other OPEC members
soon decided to maintain production quotas. Saudi Arabia’s influence within OPEC also was evident during the Persian
Gulf War (1990–91)—which resulted from the invasion of one OPEC member (Kuwait) by another (Iraq)—when the
kingdom agreed to increase production to stabilize prices and minimize any disruption in the international oil market.

During the 1990s OPEC continued to emphasize production quotas. Oil prices, which collapsed at the end of the
decade, began to increase again in the early 21st century, owing to greater unity among OPEC members and better
cooperation with nonmembers (such as Mexico, Norway, Oman, and Russia), increased tensions in the Middle East, and a
political crisis in Venezuela. Having reached record levels by 2008, prices collapsed again amid the global financial
crisis and the Great Recession. Meanwhile, international efforts to reduce the burning of fossil fuels (which has
contributed significantly to global warming; see greenhouse effect) made it likely that the world demand for oil would
inevitably decline. In response, OPEC attempted to develop a coherent environmental policy. The power of OPEC has
waxed and waned since its creation in 1960 and is likely to continue to do so for as long as oil remains a viable energy
resource.
 NAFTA

NAFTA stands for the North American Free Trade Agreement, which was negotiated by President George H.W.
Bush during his 1989—1993 term in office, and went into effect under President Bill Clinton in 1994. The agreement is
between the U.S., Canada, and Mexico, and was initially created to help lower costs of trade and bolster North American
trade. The agreement eliminated almost all tariffs and taxes on imports and exports. The agreement also eliminated trade
barriers between the three countries.

A Brief History of NAFTA

Back in 1984, President Ronald Reagan passed the Trade and Tariff Act, which gave the president special authority to
negotiate free trade agreements more quickly. Going off of Reagan's initiative, Canadian Prime Minister Brian Mulroney
supported the president, and the Canada-U.S. Free Trade Agreement was signed in 1988 and went into effect the
following year.

When Bush became president, he began to negotiate with Mexican President Carlos Salinas de Gortari to generate
a trade agreement between Mexico and the U.S. The trade agreement was part of Bush's three-part plan called
the Enterprise for the Americas Initiative, which also included debt-relief programs.

After Mexico lobbied for a trilateral trade agreement in 1991, NAFTA was created as a way to open up free trade
between the three, not just two, superpowers in North America. Bush signed the NAFTA agreement in 1992, which was
also signed by his Canadian and Mexican counterparts, Mulroney and Salinas.

The agreement went into effect under Clinton, who signed the agreement himself on Dec. 8, 1993. By January
1994, the trade agreement went into effect. Despite being a joint effort, NAFTA was considered one of Clinton's first
victories as president.

What Is NAFTA's Purpose?

According to NAFTA's article 102 of the agreement, there are six declared objectives of the treaty.

 Eliminate barriers to trade in, and facilitate the cross-border movement of goods and services between the territories of the
parties.
 Promote conditions of fair competition in the free trade area.
 Increase substantially the investment opportunities in the territories of the parties.
 Provide adequate and effective protection and enforcement of intellectual property rights in each party's territory.
 Create effective procedures for the implementation and application of this agreement, for its joint administration, and for
the resolution of disputes.
 Establish a framework for further trilateral, regional, and multilateral cooperation to expand and enhance the benefits of
this agreement.

Trade Barriers
Trade barriers are government-imposed restraints on trade with other nations. They are typically implemented
to protect domestic producers and make international trade more difficult and expensive. Trade barriers take the
form of either tariffs or non-tariff barriers to trade. The main objective of trade restrictions or protectionist
policies is to safeguard, promote, and strengthen domestically produced goods and services by employing trade-
restrictive measures like import quotas and tariffs.

Taxes
Taxes are mandatory contributions levied on individuals or corporations by a government entity—whether local,
regional, or national. Tax revenues finance government activities, including public works and services such as roads and
schools, or programs such as Social Security and Medicare.

In economics, taxes fall on whoever pays the burden of the tax, whether this is the entity being taxed, such as a
business, or the end consumers of the business’s goods. From an accounting perspective, there are various taxes to
consider, including payroll taxes, federal and state income taxes, and sales taxes.
KEY TAKEAWAYS

 Taxes are mandatory contributions collected by governments.

 The Internal Revenue Service (IRS) collects federal income taxes in the United States.
 There are many forms of taxes and most are applied as a percentage of a monetary exchange (for example, when
income is earned or a sales transaction is completed).
 Other forms of taxes, such as property taxes, are applied based on the assessed value of a held asset.
 Understanding what triggers a tax situation can enable taxpayers to manage their finances to minimize the
impact of taxes.

Understanding Taxes
To help fund public works and services—and to build and maintain the infrastructure used in a country—a
government usually taxes its individual and corporate residents. The tax collected is used for the betterment of
the economy and all who are living in it.

In the United States and many other countries in the world, income taxes are applied to some form of money
received by a taxpayer. The money could be income earned from salary, capital gains from investment
appreciation, dividends or interest received as additional income, payments made for goods and services, and so on.

Tax revenues are used for public services and the operation of the government, as well as for Social
Security and Medicare. As the large baby boomer generation has aged, Social Security and Medicare have claimed
increasingly high proportions of the total federal expenditure of tax revenue. Throughout U.S. history, tax policy has
been a consistent source of political debate.

A tax requires a percentage of the taxpayer’s earnings or money to be taken and remitted to the government.
Payment of taxes at rates levied by the government is compulsory, and tax evasion—the deliberate failure to pay one’s
full tax liabilities—is punishable by law. (On the other hand, tax avoidance—actions taken to lessen your tax liability
and maximize after-tax income—is perfectly legal.)

Types of Taxes
There are several very common types of taxes:

 Income tax—A percentage of generated income that is relinquished to the state or federal government
 Payroll tax—A percentage withheld from an employee’s pay by an employer, who pays it to the government on
the employee’s behalf to fund Medicare and Social Security programs
 Corporate tax—A percentage of corporate profits taken as tax by the government to fund federal programs
 Sales tax—Taxes levied on certain goods and services; varies by jurisdiction
 Property tax—Based on the value of land and property assets
 Tariff—Taxes on imported goods; imposed with the aim of strengthening domestic businesses
 Estate tax—Rate applied to the fair market value (FMV) of property in a person’s estate at the time of death; the
total estate must exceed thresholds set by state and federal governments

Poll Taxes

Poll tax, in English history, a tax of a uniform amount levied on each individual, or “head.” Of the poll taxes in
English history, the most famous was the one levied in 1380, a main cause of the Peasants’ Revolt of 1381, led by Wat
Tyler. In the United States, most discussion of the poll tax has centred on its use as a mechanism
of voter suppression directed originally at African Americans, especially in Southern states.

The origin of the tax in the United States is associated with the agrarian unrest of the 1880s and ’90s, which
culminated in the rise of the Populist Party in the West and the South. The Populists, a low-income farmers’ party, gave
the Democrats in these areas the only serious competition that they had experienced since the end of Reconstruction. The
intensity of competition led both parties to bring blacks back into politics and to compete for their vote. Once the
Populists had been defeated, the Democrats amended their state constitutions or drafted new ones to include various
disfranchising devices. When payment of the poll tax was made a prerequisite to voting, impoverished blacks and often
poor whites, unable to afford the tax, were denied the right to vote.