Keynesian Economics

This is a macroeconomic theory based on the ideas of 20th-century British economist John Maynard Keynes. So, what is the main idea of this theory. Maynard Keynes thought that market economy cannot be stable. This means that aggregate demand doesn't equal aggregate supply (stable situation with full employment). The reason of this is that people are willing to save(ALWAYS!). It is impossible to overcome the willing to save. To solve this problem the government has to provide governments offers to stimulate aggregate demand (increase government spending).

So lets have a look on the situation without government's inculcation into the market economy. Decreasing in aggregate demand would cause decreasing in aggregate supply in the future. This would cause a destroying small firms, worker's  discharge from big companies. It would cause high rate of unemployment. So people would spend less, because they would earn less. In conclusion, all this would bring to a shortage in aggregate demand. As we see, this is exclusive circle .

Maynard Keynes suggested that the government should provide offers for companies to create places for workers and it would finally cause an increasing in aggregate demand.