NYSTCE 115 – Social Studies Practice Exam

Keynesian economics focuses on the theory of total spending in the economy and its effects, particularly during periods of economic downturn. This approach, developed by economist John Maynard Keynes, emphasizes the role that aggregate demand plays in influencing economic output and overall economic health. According to Keynesian theory, when aggregate demand is insufficient, it can lead to unemployment and stalled economic growth.

Keynes advocated for government intervention during these times, suggesting that increased public spending or tax cuts could stimulate demand, boost consumption, and ultimately help the economy recover. This understanding of the relationship between total spending, employment levels, and economic growth is central to Keynesian economics and highlights the importance of active fiscal policy as a means of managing economic cycles.

The other options, while related to economic theories, do not encapsulate the unique focus of Keynesian economics on total spending and its immediate effects on the broader economy.