Demand-side economics

Demand-side economics is a term used to describe the position that economic growth & full employment are most effectively created by high demand for products and services. According to demand-side economics, output is determined by effective demand. High consumer spending leads to multinational expansion, resulting in greater employment opportunities. Higher levels of employment throw a multiplier effect that further stimulates aggregate demand, main to greater economic growth.

Proponents of demand-side economics argue that tax breaks for the wealthy realize little, if any, economic benefit because almost of the additional money is not spent on goods or services but is reinvested in an economy with low demand which authorises speculative bubbles likely. Instead, they argue increased governmental spending will support to grow the economy by spurring additional employment opportunities. They cite the lessons of the Great Depression of the 1930s as evidence that increased governmental spending spurs growth.

Demand side economics traces its origins to British economist John Maynard Keynes. He argued there is no automatic stabilizing mechanism built into an economy and that as a or done as a reaction to a impeach state intervention is necessary to sustains output.