Keynesian Economics

Definition

An economic theory stating that government intervention is necessary to ensure an active and vibrant economy. This theory suggests that during recessions, government should offset the decrease in private spending with an increase in public spending in order to save jobs and stop further economic deterioration.

Related terms

Aggregate Demand: The total demand for final goods and services in an economy at a given time.

Stimulus Package: Economic measures put together by a government to stimulate a struggling economy.

Deficit Spending: The amount by which spending exceeds revenue over a particular period of time.