Keynesian economics
John Maynard Keynes, a British academic and government official, changed the field of economics. Under classical economics, governments did little to manage the economic cycle, which they believed would right itself. But Keynes argued, in the face of the Great Depression, that a recession could dent the “animal spirits” of businesspeople and discourage consumers from spending. Governments, rather than balance their budgets, could borrow to spend money and this spending would revive demand. After 1945, many governments adopted a Keynesian approach and used fiscal policy to manage the economic cycle.
