Keynesianism

Keynesianism is an economic theory developed by John Maynard Keynes, which suggests that during times of economic downturns, the government should increase spending and reduce taxes to boost demand, create jobs, and stimulate growth. When private sector spending is low, government intervention helps fill the gap, encouraging overall economic activity. Conversely, during periods of overheat, the government can reduce spending to prevent inflation. This approach emphasizes that government policy plays a crucial role in maintaining economic stability and promoting full employment, especially in times of recession or economic crisis.