Keynesian economics | Topics | tutor2u Economics

The economics of John Maynard Keynes. The belief that the state can directly stimulate demand in a stagnating economy. For instance, by borrowing money to fund public works projects like new roads, bridges, housing, schools and hospitals. Keynesian economists do not believe that markets always clear; they argue that an economy can suffer from persistently high rates of unemployment due to a lack of effective demand in many markets and industries. The cycle of low demand (and perhaps falling prices) can be difficult to break especially when consumer and business confidence is low. See also Liquidity Trap


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