Keynesian economics.

New policies and explanations were needed, and that was what Keynes provided in that moment. A main axiom appeared in his already mentioned General Theory of Employment,
Interest and Money (1936), which can be summarized into two big statements: (1) the already existent theories about unemployment were nonsense; not the high level of prices or the high salaries could explain the persistent economic depression or the widespread unemployment; (2) opposite to this, an alternative explanation to these phenomenon was put forward revolving around the aggregate demand, constituted by the whole expenditures of the consumers, the investors, and the public establishments. According to Keynes, when the aggregate demand is not enough, the sales diminish and job posts are lost, but when the aggregate demand is high and growing, the economy thrives.

A powerful theory came from these two global definitions that made possible to explain the economic behavior. This interpretation constitutes the ground of contemporaneous macroeconomics. Since the amount of goods that a consumer can get is restricted by the incomes that he receives, consumers can not be responsible for the ups and downs of the economic cycle. Therefore, the heartbeats of economy are the investors (businessmen) and the governments. Across a recession, and also in an economic depression, private invests must be encouraged or, otherwise, increase the public expenditure. In case that a little contraction be produced, the granting of credits must be provided and there must be reduced the interest rates (which are a main substrate of monetary policy), that is to encourage the private investment and to reestablish the aggregate demand, increasing it in order to reach the full employment. If the contraction of the economy is big, there will

have to fall into a budget deficit, investing in public work projects or conceding nonrefundable grants to those who are more damaged.