Key Terms self-regulating economy: an economy in which problems such as unemployment are resolved without government intervention, through the working of the invisible hand , and in which government attempts to improve the economy’s performance would be ineffective at best, and would probably make things worse. Keynesian economics: a school of thought emerging out of the works of John Maynard Keynes; according to Keynesian economics, a depressed economy is the result of inadequate spending and government intervention can help a depressed economy through monetary policy and fiscal policy. monetary policy: changes in the quantity of money in circulation designed to alter interest rates and affect the level of overall spending fiscal policy: changes in government spending and taxes designed to affect overall spending.
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