The British economist John Maynard Keynes formed a macroeconomic thought via which he suggested that decisions in the private sector more often than not lead to inefficient macroeconomic outcomes. Thereby he stated that the role of the public sector in the governance of the economy through stable monetary and fiscal policy is necessary.
1) Classical economics and Keynes's new idea - Keynesian macroeconomics is a deviation from the very foundation of macroeconomics namely classical dichotomy. The main difference between Keynesian economics and its classical counterpart is the fact that Keynes argues that prices are sticky. By this he means prices take a longer time to adjust to changes in other variables in the economy such as money supply. The point here is that unlike the classical economic theories where real money balances are said to be constant as prices are expected to rise equiproportionately to a rise in the money supply, Keynes suggests that this does not happen since prices are sticky a rise in money supply leads to a rise in real money balances in the short run.
2) Basic Suggestions - Keynes suggests for an economy predominantly dominated by the private sector but accounts for a strong role of the public sector in policy making. The Keynesian thought of macroeconomics is probably the most popular and successful thought. This thought has serves as the economic model during the Great Depression and during the recovery period following World War II.
However following the stagflation in the 1970`s it was replaced by a new set of thoughts namely the New Keynesian Thought. However following the recession in 2007, the Keynesian principles have again started to gain popularity amongst central banks and policy makers
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