Keynesian Economics : Concept, history, and examples.
What is Keynesian economics in simple terms? Keynesian economics is a demand side policy and it explains how the changes…
Keynesian economics
According to Keynesian economics, when the economy is in a recession with unemployment, the government should apply expansionary fiscal policy. To learn more, kindly click here
Keynes contended that prolonged periods of high unemployment could result from a lack of overall demand. Consumption, investment, government purchases, and net exports (the difference between what a country sells to and buys from foreign countries) are the aggregate of four factors that determine an economy’s output of goods and services. One of these four factors must be the source of any growth in demand.
However, as expenditure decreases during a recession, powerful forces frequently depress demand. For instance, during economic downturns uncertainty frequently undermines consumer confidence, leading people to cut spending, particularly on luxuries like a home or a car. Businesses may spend less on investments as a result of customers spending less because there is less of a need for their products.