Keynesianism: Government Spending During The New Deal

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Keynesianism is the belief the government must manage the economy by spending more money when in a recession and cutting spending when there is an inflation. This involves raising demand by government spending on public works projects and relief effort. A good example of Keynesianism was government spending during the New Deal. Programs that were used did not end the Great Depression, but they decreased unemployment and alleviated some of the Depression’s effects.
Monetarism is the belief that inflation occurs when there is too much money in the economy and too few goods, advocates increasing the money supply at a rate about equal to economic growth then letting the free market operate. The Federal Reserve Board lowered interest rates in the
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