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Problems of Keynesianism Keynesianism was designed after the war and with the view to achieving full employment within the economy, it was found to be very effective. However Keynesianism failed during the 1970's bringing its use to a close. Keynesianism's biggest problem was its failure to deal with inflation. Cyclical Unemployment - This is caused by an insufficient demand for goods and services in the national and international economy. Cyclical Unemployment gets its name because trade tends to follow a series of booms and slumps. During a boom the demand for goods/services is high, resulting in full employment, during a slump the opposite happens. Between 1945-1970 the economy was experiencing a boom and Keynesianism was at its peak, employment was high. After 1970 the level of unemployment grew. During such slumps in the economy Keynesianism is less effective and not practical. Structural Unemployment - This is where the structure of the economy changes. Certain...

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