Give an example of Keynes's policies in action.

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pohnpei397 | College Teacher | (Level 3) Distinguished Educator

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The majority of government economic initiatives put forth in America today are examples of Keynes's policies.  This is particularly true of policies favored by the Democrats.  

John Maynard Keynes believed that the government should regulate the economy through the use of fiscal policy.  Most importantly, he believed that the government should use taxes and spending to fix the economy in times of recession.  Perhaps the most prominent example of such a program in recent times is President Obama's stimulus package that was passed in 2009.  At that time, the US economy was in a deep recession.  Congress then passed a massive government spending bill to try to increase aggregate demand and get the economy out of the recession.  This is exactly the sort of policy that Keynes would have suggested and that classical economics would say is a bad idea.


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