What is the primary focus of Keynesian economics regarding economic cycles?

Keynesian economics primarily emphasizes the importance of aggregate demand in influencing economic activity and cycles. It posits that fluctuations in aggregate demand can lead to significant economic downturns, such as recessions, where spending decreases and economies can fall into a downward spiral.

Keynesians advocate for government intervention, especially during times of economic distress, to help boost aggregate demand through fiscal policies, such as increased government spending or tax cuts, which can stimulate consumption and investment. This is in contrast to supply-side approaches, which focus primarily on production capacity and incentives for businesses, rather than how demand can rise and fall and affect overall economic performance.

In addition, Keynesian thought moves away from the notion of long-term market equilibrium as the sole focus, which is more typical of classical economics. Instead, it acknowledges that markets can be inefficient and may not self-correct in the short run, necessitating active government management to stabilize the economy. Thus, the emphasis on both the role of aggregate demand and the argument for government intervention characterizes the core of Keynesian economics.