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Keynesian economics
Keynesian economics definition - finance
An economic theory, created by John Maynard Keynes,
that advocates governments becoming involved in the markets and economy in order
to produce price stability and economic growth. Keynes said that insufficient
demand results in unemployment, and too much demand results in inflation. To
influence demand levels, the government should adjust its spending and taxation
policies. He outlined his theory in The
General Theory of Employment, Interest, and Money, which was published
in 1935. His ideas clash with those of classical economists, such as Adam
Smith, who believe the government should not get involved in the markets or
econ-omy. The severe level of unemployment in the U.S. and Europe following the
Great Depression of 1929 gave Keynesian economists more prominence.
Webster's New World Finance and Investment Dictionary Copyright © 2003 by Wiley Publishing, Inc., Indianapolis, Indiana.
Used by arrangement with John Wiley & Sons, Inc.
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