Part 5/9:
Born out of the Great Depression, Keynesian Economics challenged the Neoclassical perspective by asserting that markets could get stuck in a prolonged state of disequilibrium without government intervention. John Maynard Keynes posited that during economic downturns, individuals might be too fearful to spend, creating an economic stagnation.
Keynes advocated for active government involvement through fiscal policy, emphasizing that the government should stimulate investment to revive the economy. His theories fostered the idea of total output—this view posits that the economy should be analyzed as a cohesive unit rather than focusing solely on individual markets.