According to the Keynesian view, what primarily drives economic performance?

The Keynesian view emphasizes that aggregate demand is the primary driver of economic performance. According to this theory, the total demand for goods and services within an economy—comprising consumption, investment, government spending, and net exports—determines output and employment levels. Keynes argued that fluctuations in aggregate demand can lead to economic cycles of boom and bust.

When aggregate demand is insufficient, it can lead to higher unemployment and unused capacity in the economy, causing a recession. Conversely, when demand is robust, it can spur economic growth and reduce unemployment. This contrasts sharply with supply-side economics, which focuses more on factors like production capacity and incentives for businesses, rather than the role of demand in driving economic activity.

Monetary policy, while significant within the Keynesian model as a tool that can influence aggregate demand through changes in interest rates and money supply, is considered a mechanism rather than the primary driver itself. Government regulations can also impact economic performance, but they do not address the central issue of demand levels in driving economic activity.

Thus, the focus on aggregate demand as the key determinant of economic performance encapsulates the central tenets of Keynesian economics, making it the correct answer.