What are the basic principles of Keynesian economics?

Keynes argued that inadequate overall demand could lead to prolonged periods of high unemployment. Business and economic growth will be promoted if the level of investment throughout a country or a society exceeds its savings rate, this is the basic principle of Keynesian theory. You can read about the Monetary System – Types of Monetary System (Commodity, Commodity-Based, Fiat Money) in the given link.

An economy’s output of goods and services is the sum of four components: consumption, investment, government purchases, and net exports as per Keynesian economic theory.

Further readings:

  1. Inflation in Economy- Types of Inflation, Inflation Remedies [UPSC Notes]
  2. Indian Economy Notes For UPSC Exam [Download PDFs]

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