What is keynesian doctrine and it's effect to microeconomics?

Answer 1

Keynesian doctrine, developed by economist John Maynard Keynes, emphasizes the role of government intervention in stabilizing economic fluctuations and promoting full employment through fiscal policy, such as government spending and taxation. In microeconomics, this doctrine influences individual firms and consumers by suggesting that aggregate demand drives economic activity, leading to increased consumption and investment during downturns. As a result, Keynesian policies can shape market behaviors, affecting supply and demand dynamics and influencing pricing strategies. This approach can also lead to greater emphasis on consumer confidence and spending in microeconomic analysis.