Keynesian Economics

Filed Under » ,
Dictionary Says

Definition of 'Keynesian Economics'

An economic theory stating that active government intervention in the marketplace and monetary policy is the best method of ensuring economic growth and stability.
Investopedia Says

Investopedia explains 'Keynesian Economics'

A supporter of Keynesian economics believes it is the government's job to smooth out the bumps in business cycles. Intervention would come in the form of government spending and tax breaks in order to stimulate the economy, and government spending cuts and tax hikes in good times, in order to curb inflation.

Related Definitions

  • Animal Spirits

    A term used by John Maynard Keynes used in one of his economics books. In his 1936 publication, "The General Theory of Employment, Interest and Money," the term "animal spirits" is used ...
    Read More »
  • Solow Residual

    A measure of the empirical productivity growth in an industry or macroeconomy over comparable time periods, such as from year to year and decade to decade. The measure is deemed residual ...
    Read More »
  • Heterodox Economics

    The analysis and study of economic principles considered outside of mainstream or orthodox schools of economic thought. Schools of heterodox economics include socialism, Marxism, ...
    Read More »
    • Paradox Of Thrift

      The notion that individual savings rather than spending can worsen a recession, or that individual saving is collectively harmful. This idea is generally attributed to John Maynard ...
      Read More »
    • Kremlinomics

      A financial buzz word used to describe economic policies which some view to be overly leftist. Kremlinomics alludes to the communist policies of the Russian government during the Cold ...
      Read More »
    • Free Enterprise

      An economic system where few restrictions are placed on business activities and ownership. In this system, governments generally have minimal ownership of enterprises in the market ...
      Read More »
    • Disequilibrium

      A situation where internal and/or external forces prevent market equilibrium from being reached or cause the market to fall out of balance. This can be a short-term byproduct of a change ...
      Read More »
    • Friedrich Hayek

      A famous economist born in Vienna, Austria, in 1899. Friedrich Hayek is well-known for his numerous contributions in the field of economics and political philosophy. Hayek's approach ...
      Read More »
    • Edward C. Prescott

      The winner of the 2004 Nobel Memorial Prize in Economics, along with Finn Kydland, for his macroeconomic analysis of the business cycle and economic policy. His 1982 paper, co-authored ...
      Read More »
    • Accelerator Theory

      An economic theory that suggests that as demand or income increases in an economy, so does the investment made by firms. Furthermore, accelerator theory suggests that when demand levels ...
      Read More »

Articles Of Interest

Partner Links