What is Keynesian Economics?

Political Economy Keynesian Economics Questions



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What is Keynesian Economics?

Keynesian Economics is an economic theory developed by British economist John Maynard Keynes during the Great Depression. It emphasizes the role of government intervention in stabilizing the economy and promoting economic growth. Keynesian economics argues that during times of economic downturn, the government should increase its spending and lower taxes to stimulate aggregate demand and boost employment. This approach is based on the belief that fluctuations in aggregate demand are the primary cause of economic instability. Keynesian economics also advocates for the use of monetary policy, such as adjusting interest rates, to manage inflation and stabilize the economy. Overall, Keynesian economics promotes the idea that government intervention is necessary to maintain full employment and stabilize the economy during periods of economic instability.