This school advocates combating recessions with government spending.
Most models in this school of economics are based on short-run price stickiness that does not satisfy the Barro critique. This school holds that the equilibrium level of output will occur where the desired total spending line intersects a 45-degree line. An increase in savings rate results in a decrease in total savings in the paradox of thrift, which was re-introduced by an early member of this school, whose advocates introduced the IS/LM model and the multiplier effect. This school advocates combating recessions with government spending. For 10 points, name this school of economics named for the British author of The General Theory of Employment, Interest, and Money.
Most models in this school of economics are based on short-run price stickiness that does not satisfy the Barro critique.
Keynesian economics [accept John Maynard Keynes; accept New Keynesian economics or Neo-Keynesian economics]