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Keynesian economics (/ ˈ k eɪ n z i ə n / KAYN-zee-ən; sometimes Keynesianism, named after British economist John Maynard Keynes) are the various macroeconomic theories and models of how aggregate demand (total spending in the economy) strongly influences economic output and inflation. [1]
What Is Keynesian Economics? Keynesian economics is a macroeconomic theory of total spending in the economy and its effects on output, employment, and inflation.
Keynesian economics, body of ideas set forth by John Maynard Keynes in his General Theory of Employment, Interest and Money (1935–36) and other works, intended to provide a theoretical basis for government full-employment policies.
Keynesian economics dominated economic theory and policy after World War II until the 1970s, when many advanced economies suffered both inflation and slow growth, a condition dubbed “stagflation.” Keynesian theory’s popularity waned then because it had no appropriate policy response for stagflation.
Keynesian economics is a theory that says the government should increase demand to boost growth. Keynesians believe that consumer demand is the primary driving force in an economy. As a result, the theory supports the expansionary fiscal policy.
John Maynard Keynes was an early 20th-century British economist, best known as the founder of Keynesian economics and the father of modern macroeconomics.
There are three principal tenets in the Keynesian descrip-tion of how the economy works: Aggregate demand is influenced by many economic deci-sions—public and private. Private sector decisions can some-times lead to adverse macroeconomic outcomes, such as reduction in consumer spending during a recession.
Keynesian economics argues that the driving force of an economy is aggregate demand—the total spending for goods and services by the private sector and government. In the Keynesian economic model, total spending determines all economic outcomes, from production to employment rate.
K eynesian economics is a theory of total spending in the economy (called aggregate demand) and its effects on output and inflation. Although the term has been used (and abused) to describe many things over the years, six principal tenets seem central to Keynesianism.
A simplified explanation of Keynesian economics - role of fiscal policy/government borrowing in overcoming recessions. Quotes diagrams and examples of Keynesian economics in action.