Keynsian Economics

Keynesian economics is an approach that emphasizes the role of government intervention in managing the economy. It suggests that during times of recession or low demand, increased government spending and lower taxes can boost economic activity by encouraging consumption and investment. Conversely, during boom periods, reducing spending or increasing taxes can help prevent inflation. This theory highlights that total demand—consumption, investment, government spending, and exports—is the primary driver of economic growth and employment, and proactive government policies can help stabilize the economy and promote steady growth.