The Keynesian theory of economics believes that government is not only helpful but necessary in a successful economy.
Keynesian economics is a macroeconomic theory of total spending in the economy and its effects on output, employment, and inflation. It was developed by British economist John Maynard Keynes during the 1930s in an attempt to understand the Great Depression.
- Keynesian economics focus on using active government policy to manage aggregate demand to address or prevent economic recessions.
- Keynes developed his theories in response to the Great Depression and was highly critical of previous economic theories, which he referred to as classical economics.
- Activist fiscal and monetary policy are the primary tools recommended by Keynesian economists to manage the economy and fight unemployment.
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