Keynes and Classical Economics

Read this article for more information about these competing perspectives. This section contains four subsections: "Wages and Spending," "Excessive Saving and Interest Rates," "Active Fiscal Policy," and "Multiplier Effect". Focus your attention on the portions within the four subsections that emphasize the short-run. You may observe that the differences among the various subsections tend to deal with the underlying nature of change.


In economics Keynesian economics , also Keynesianism and Keynesian Theory, is based on the ideas of twentieth-century British economist John Maynard Keynes. According to Keynesian economics the public sector, or the state, can stimulate economic growth and improve stability in the private sector – through, for example, interest rates, taxation, and public projects.

The theories forming the basis of Keynesian economics were first presented in The General Theory of Employment, Interest and Money, published in 1936. It was his explanation for the cause of the Great Depression for which he was, deservedly, most well known. Although Keynesian theories no longer adhere to many of the points of Keynes' original or even later work, it is through their continuing change and development that they continue to hold sway today.

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