Keynesian economics
Definition
A school of economic thought developed by John Maynard Keynes that emphasizes the role of government intervention, particularly through fiscal policy, to stabilize the economy and promote economic growth.
Analogy
Think of Keynesian economics like a doctor prescribing medicine to treat an illness. The government is like the doctor, using fiscal policies (medicine) to intervene and heal the economy (patient).
Related terms
Fiscal policy: The use of government spending and taxation to influence the overall health and stability of the economy.
Aggregate demand: The total amount of goods and services demanded in an economy at a given time.
Multiplier effect: The idea that an initial change in spending or investment will lead to larger changes in aggregate demand and economic output.
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