KEYNESIAN ECONOMICS

A theory that states the total spending in the economy and its effects on output and inflation. British economist John Maynard Keynes developed Keynesian economics in 1960s at the height of the Great Depression. He said the government had to increase its expenditures and lower tax rates in order to stimulate demand and get the global economy out of the Depression.

Keynesian Economics, considered as a "demand-side" theory and centralized in the changes in the economy in a short period of time, states that an economy can obtain optimal economic performance – prevent decreased economic activities – by aggregating demand through stabilizing activist and implementing government’s economic intervention policies.