Keynesian economics is the idea that government spending can be used to stabilize the economy, and stresses the importance of moderate economic growth. According to Keynes, during prosperity governments should reduce spending to avoid inflation and to slow down consumer spending in order to maintain stable growth. During times of prosperity Keynesian theory states that governments should pay off debt, reducing the amount of money lost to interest payments. In Keynesian theory debt from fiscal spending is only justifiable when the economy is not doing well in order to provide help, and that in turn decreases disparity and stimulates the economy. Keynesian economies are often known as demand side economics, and tend to be plagued by overspending and debt. Fear of economic crisis can reduce consumer confidence, stifle investments and slow the economy.…
