Government must step in during crises from "summary" of The General Theory of Employment, Interest, and Money by John Maynard Keynes
During times of crises, the private sector is unable to effectively allocate resources and generate sufficient demand to maintain full employment. This is due to the inherent uncertainty and instability that characterize economic downturns, leading to a situation where firms are hesitant to invest and consumers are reluctant to spend. As a result, unemployment rises, businesses fail, and overall economic activity contracts. In such circumstances, the government must step in to fill the gap left by the private sector. By increasing its own spending, the government can create demand for goods and services, thereby stimulating economic growth and employment. This intervention is necessary to prevent a downward spiral of declining output, income, and employment. Furthermore, government i...
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