For a modern state,
restoration of high levels of employment with stable price level, realization
of high rates of economic growth and maintenance of balance function of
payments(BOP) are some of the basic functions to perform. They are known as
stabilization of the state. Keynes is the first well known economist who
advocated the role of state in economic field of life. He criticized classical
view supply creates its own demand and floated the idea of permanent state-
international policy to derive aggregate demand in the desired direction. If it
is less than potential aggregate supply, there appears unemployment and
recession and thus aggregate demand needs to be added up by government sources.
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