Keynesian Economics

An economic theory developed by John Maynard Keynes during the Great Depression, arguing that government intervention through fiscal spending and monetary policy is necessary to stabilize economic cycles. Keynesians believe that aggregate demand -- not supply -- is the primary driver of economic output, and that recessions can be fought with deficit spending. This framework underpins much of modern central bank policy, though it is frequently debated against monetarist and Austrian school perspectives.