What is Keynesian economy?


Keynesian economy is about the relationship among following 3 parameters
  • Unemployment
  • Growth (economic)
  • Inflation
It argues that you can control 2 parameters which would influence the 3rd parameter.
During  a good economic growth [case 1]
growth is high, causing unemployment is low,  which in turn causes inflation to become high
During an economic downturn [case 2]
growth is low, causing unemployment is high, which in turn causes inflation to become low (or could cause deflation)
In ideal scenario, growth should be high, unemployment should be low and inflation should be low too.
Keynesianism states that Central Bank should do the opposite of what public is doing.
Thus, in case 1 above, government should save money and try to control inflation (because if more money is flowing to economy, the inflation would rise).
Hence, in case 2 above, government should spend money by investing in infrastructure etc. which would drive economical growth leading to low unemployment
Keynesianism always gives priority to low unemployment over low inflation. Thus, it makes poor less poor and rich less rich (a reason why riches often dislike Keynesian economy).
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