The Keynesian Model

The Keynesian model is all about the idea that the government needs to step in and help out when the economy’s not doing so hot. Imagine we're in a recession; people aren't buying much, businesses are struggling, and unemployment's creeping up. According to Keynesian economics, this is where the government should jump in with some serious spending—like building new infrastructure, funding projects, or giving people tax cuts. The idea is that this extra government spending will boost overall demand for goods and services, get businesses back on their feet, and help create jobs. 

On the flip side, if the economy’s running too hot and inflation is rising, the government should pull back a bit—maybe cut spending or hike taxes—to cool things down. For example, if the government decides to invest heavily in new roads and schools during a downturn, it’s hoping to kickstart economic activity and help lift the economy out of its slump. So basically, Keynesian economics is all about using government policies to smooth out the ups and downs of the economy and keep things more stable.