USA HISTORY

Detailed explanation-1: -Stabilizing the economy For example, Keynesian economists would advocate deficit spending on labor-intensive infrastructure projects to stimulate employment and stabilize wages during economic downturns. They would raise taxes to cool the economy and prevent inflation when there is abundant demand-side growth.

Detailed explanation-2: -Keynes supported government intervention during times of economic turmoil. Among the theories he presented in “General Theory” was that economies are chronically unstable and that full employment is only possible with a boost from government policy and public investment.

Detailed explanation-3: -The Problem with Keynesianism In the Keynesian view, aggregate demand does not necessarily equal the productive capacity of the economy; instead, it is influenced by a host of factors and sometimes behaves erratically, affecting production, employment, and inflation.

Detailed explanation-4: -The theories of John Maynard Keynes, known as Keynesian economics, center around the idea that governments should play an active role in their countries’ economies, instead of just letting the free market reign. Specifically, Keynes advocated federal spending to mitigate downturns in business cycles.