Unit 1.2 · Economic Methodology and the Evolution of Economic Thought
Keynesian Revolution (20th Century)
AO2
Syllabus Requirement
Explains Keynes’s challenge to classical macroeconomics, emphasising aggregate demand management and active fiscal policy.
Assessment Objectives
AO2Application and Analysis
Summary
The Keynesian Revolution refers to the shift in economic thought initiated by John Maynard Keynes, who argued for government intervention to address economic downturns. This approach emphasizes the importance of stimulating aggregate demand through increased government spending and tax reductions, particularly during periods of recession. Understanding this revolution is essential for grasping modern macroeconomic policies and their applications.