ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Keynesian economics, recognizes the role of government finance in sparking aggregate demand. Federal spending and tax cuts leave more money in peoples’ pockets, which can stimulate demand and investment.

Detailed explanation-2: -Keynesian economics is a theory that says the government should increase demand to boost growth. 1 Keynesians believe that consumer demand is the primary driving force in an economy. As a result, the theory supports the expansionary fiscal policy.

Detailed explanation-3: -Keynes recognized that the government budget offered a powerful tool for influencing aggregate demand. Not only could aggregate demand be stimulated by more government spending-or reduced by less government spending-but consumption and investment spending could be influenced by lowering or raising tax rates.

Detailed explanation-4: -Keynesian economics argues that demand drives supply and that healthy economies spend or invest more than they save. To create jobs and boost consumer buying power during a recession, Keynes held that governments should increase spending, even if it means going into debt.