Keynesian

adjective; also noun (Keynesian, Keynesians)

/ˈkeɪnziən/

Relating to the macroeconomic theory and policy prescriptions of John Maynard Keynes (1883-1946), which hold that aggregate demand — the total spending in an economy — is the primary driver of output and employment in the short run, and that market economies can persist in sub-optimal equilibria (e.g., high unemployment) without self-correction. Keynesian prescriptions advocate government fiscal intervention — increased public expenditure and/or tax cuts — to stimulate aggregate demand during recessions. India's Union Budget 2020-21 and 2021-22 significantly expanded capital expenditure as a Keynesian counter-cyclical response to the COVID-19-induced demand collapse.

✍️ Usage in a UPSC answer

India's fiscal response to COVID-19 — sharply raising capital expenditure to ₹7.5 lakh crore in 2022-23 and ₹10 lakh crore in 2023-24 — reflects a neo-Keynesian strategy of using the public investment multiplier to compensate for private demand deficiency during a crisis of aggregate demand.

Synonyms

demand-side economicsfiscal interventionismaggregate-demand theorycounter-cyclical policy

Antonyms

classical economicssupply-side economicsmonetarismausteritySay's Law

🌱 Word Family

Keynesianism (noun), Keynesian economics (noun phrase), neo-Keynesian (adjective), post-Keynesian (adjective), Keynesian multiplier (noun phrase)

🔡 Root

Proper noun: Keynes (surname, from Cahagnes, Normandy) + -ian = adjectival suffix denoting relation to or following of

📜 Etymology

The eponym derives from John Maynard Keynes (1883-1946), whose The General Theory of Employment, Interest and Money (1936) revolutionised macroeconomics. His surname traces to the Norman village of Cahagnes (latinised de Cahagnes), from which his ancestors migrated to England. The adjectival form 'Keynesian' appeared immediately after the General Theory and became institutionalised in post-war economic discourse, especially through the IS-LM model formalisation by John Hicks (1937).

🧠 Memory Hook

KEYNESIAN = KEY + NESIAN. Keynes held the KEY to fighting recessions: use GOVERNMENT SPENDING as the key to unlock a stalled economy. When private demand fails, the government's KEYSTONE spending props up the arch of GDP.

💰 Indian Economy 📖 Seen in: Indian Economy — Growth, Planning & De...

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