Keynesian theory

Question

Keynesian theory

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Keynesian theory is primarily demand-oriented and emphasizes the role of government intervention in managing demand to achieve full employment and economic stability. It also challenges the classical theory and its assumption of Say's Law, which suggests that supply creates its own demand. instead, the Keynesian theory posits that demand deficiencies can lead to unemployment and economic downturns, and therefore advocates for fiscal and monetary policies to stimulate demand. Aggregate supply and the average price level are still important factors, but they are not the primary focus of Keynesian theory.

Keynesian Theory