Keynesian economics is a “demand side” theory that was developed by British economist John Maynard Keynes in his attempt to understand the Great Depression. Keynes concluded that government spending and tax cuts would lift the world economy out of the Great Depression. Keynes argued that optimal economic performance can be achieved by influencing aggregate demand through activist policy and government economic intervention. Keynesian theory holds that any change in aggregate demand will have its greatest short-run effect on real output and employment, not on prices. Keynesians also believe that short-term effects cannot influence what long-term outcomes might be. In the words of Keynes: “In the long run, we are all dead.” Government stimulation of the economy is broken down into two parts: fiscal policy and monetary policy. In Keynesian economics, monetary policy produces real effects on employment and economic production only when prices are fixed. Which indicates that Keynesian economics is much more a theory than a real and effective practice. But Keynesian economists believe...