General Glut - Keynesian

Keynesian

Keynesian economics, and underconsumptionism before it, argue that fiscal stimulus in the form of government deficit spending can solve general gluts.

This is a demand side theory, rather than the supply-side theory of classical economics; the fundamental ideas are that savings in a recession or depression causes the paradox of thrift (excess saving, or more pejoratively, "hoarding"), causing a deficit of effective demand, yielding a general glut. Keynes locates the cause in sticky wages and liquidity preference.

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