Keynesianism refers to an economic theory developed by economist John Maynard Keynes during the Great Depression. It advocates for government intervention through fiscal policy (spending and taxation) to stabilize the economy during periods of recession or inflation.
Related terms
Fiscal policy: This term encompasses government decisions regarding spending levels and taxation rates. It focuses on using these tools to influence economic activity with goals such as stabilizing prices or boosting employment.
Demand-side economics: This term represents the idea that government intervention, such as increasing spending or cutting taxes, can stimulate consumer demand and drive economic growth.
Multiplier effect: This term refers to the concept that an initial change in spending by the government or consumers can lead to a more significant overall impact on economic output. For example, if the government spends $100, it may generate $300 of total production due to increased spending and subsequent re-spending within the economy.