Keynesian formula
Keynesian formula is a way to help figure out how much money a government should spend to keep the economy in balance. It was developed by economist John Maynard Keynes in the 1930s. It works like this:
First, the government takes a look at how much money there is in the economy, also called the Gross Domestic Product (GDP). Then, the government subtracts the amount of money they want to save. Finally, the government divides the remaining money by two, and that's how much money they should spend.
For example, if the GDP is $1000 and the government wants to save $200, then the Keynesian formula says they should spend $400.
First, the government takes a look at how much money there is in the economy, also called the Gross Domestic Product (GDP). Then, the government subtracts the amount of money they want to save. Finally, the government divides the remaining money by two, and that's how much money they should spend.
For example, if the GDP is $1000 and the government wants to save $200, then the Keynesian formula says they should spend $400.
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