A Tricky Problem of Stagflation Assignment Example | Topics and Well Written Essays - 1000 words

A Tricky Problem of Stagflation - Assignment Example It was pathbreaking in several ways, in particular, because it introduced the notion of aggregate demand as the sum of consumption, investment, and government spending; and because it showed (or purported to show) that full employment could be maintained only with the help of government spending (Library of Economics and Liberty 2008.) By 1965, there was a backlash against Keynesian economic thought. â€Å"In 1965 Scott Gordon declared that, in Canada, throughout the 1940’s and 1950’s ‘Keynesian statements were confined to the abstract planes of discourse; they were not connected with actual policy’† (Neill 180). However, Gordon did not take into account that Keynesian economics assumed a closed, and mature economic system, and the Canadian economic climate at the time was open and small (Neill 173) Gordon was not alone, however, many economists shared his views, and this was the downturn of the popularity of Keynesian economics. NAFTA, or the North American Free Trade Agreement, opened up trade between Canada, the United States, and Mexico. Because of NAFTA, there are no longer any tariffs or trade restrictions between these countries. There is no question that the United States is economically the strongest of these nations, however, there are benefits to all of the countries involved. â€Å"Both Mexico and Canada see NAFTA as a way of securing access to the U.S. market and the trade benefits cannot be of the greatest significance for the United States, the United States looks at Canada and Mexico in terms of industrial and commercial location as much as trade† (Hoebing, Weintraub, and Baer 108). Those who oppose NAFTA argue that NAFTA should have environmental standards and minimum wages. This is because of the shift of work moving to Mexico from the United States, there are less environmental regulations in Mexico, and workers can be paid less than they can in the United States. The quiet revolution took place in the 1960’s in a spirit of Quebec nationalism.     Ã‚