Keynesian Economics

Keynesian economics, developed by John Maynard Keynes during the Great Depression, emphasizes the role of government intervention in the economy. It argues that during periods of economic downturn, consumer demand often falls, leading to unemployment and reduced production. Keynesians believe that governments should increase spending and reduce taxes to stimulate demand, even if it means running a budget deficit. This approach aims to boost economic activity and restore full employment. The idea is that well-timed government action can help stabilize the economy, ensuring it functions more effectively in the face of fluctuations.