Keynesian (pronounced Canes-e-an) economics refers to the macroeconomic theories of John Maynard Keynes (1883–1946), considered by many to be the greatest economist of the 20th century. Lord Keynes, knighted for his work on behalf of Great Britain, developed much of the framework of modern macroeconomic theory. Keynesian economics focuses on aggregate expenditures rather than aggregate SUPPLY in an economy. Aggregate expenditures are divided into four categories: CONSUMPTION, INVESTMENT, government, and net trade. In the Keynesian economics income-expenditures model, the price level is assumed to be fixed, and changes in aggregate expenditures determine the EQUILIBRIUM level of output. Later economists relaxed the assumption of fixed prices, arguing that as an economy approaches a full-EMPLOYMENT level of output, increases in aggregate expenditures will increase both INCOME and prices. The Keynesian model challenged the prevailing classical theory, which suggested that an economy was always at or near a full-employment level of output and that adjustments in prices and wages would alleviate any temporary surpluses or shortages in the market. Focusing on aggregate expenditures, the Keynesian economic model suggests that any source of expenditure stimulates output, income, and employment. Developed in the 1930s during the height of the GREAT DEPRESSION, Keynesian economics supported government intervention into the marketplace during periods of insufficient privatesector DEMAND. Keynesian economic thinking was consistent with the efforts of Franklin Roosevelt’s “New Deal” programs, creating huge increases in government spending. (In Keynesian economics, when an economy is at or above a full-employment level of output, it is logical for government to reduce spending and/or increase taxes as a means of reducing inflationary pressure.) Keynesian economics focuses on short-run adjustments in aggregate expenditures and income. In possibly his most famous quip, Keynes justified his approach by saying, “In the long run we are all dead.” Monetarists challenge Keynesian economic theory regarding the role and importance of INTEREST RATES. In Keynesian theory, changes in interest rates affect overall aggregate expenditures by changing levels of investment. Monetarists suggest changes in interest rates have a greater impact in an economy.