Keynesianism - Research Paper Example

Estimated to be worth about $787 billion, the stimulus issued by the Obama administration was to save over 90,000 jobs (Calmes, 2009). The stimulus was broken down to $288 billion, allocated to tax cuts, $224 billion for unemployment benefits, education and healthcare, and $275 billion for job creation through grants and loans from government. The main aim of the plan was to restore confidence in the economy and to spur economic growth given the monetary policy had failed to save the situation.

It was also to bring confidence by reducing bonuses to senior executives whose companies had received TARP funds. According to Williams and Calabrese (2013), in a scientific society, there are about four types of theories: descriptive, explanatory and predictive, instrumental and normative. Descriptive and explanatory theories can be categorized under positive while the other two are grouped under prescriptive or normative. Descriptive theories can be said to be forerunners of explanatory theories as they tend to find how different constructs are interrelated.

These may include core elements, characteristics, relationships, or dimensions. They are meant to set stage for explanation and prediction. Explanatory theory on the other hand gives insights on what caused an outcome in way that it can be observed. Predictions come in as a test of explanations. instrumentals depend on predictions, they work on the fact that if something occurs, another thing will occur as a result. The Obama Stimulus was positive in nature. It focused on the actual facts on the ground as opposed to general assumptions.

At the time of its launch, unemployment rate was at 9%, and to solve this, the government allocated $275 billion for job creationin since monetary policy had failed to bear concrete fruits. This plan was also based on normative theories as it determined how the economy behaved within a time frame of ten years. Within this