Final answer:
Keynesianism advocates for government intervention in the economy, with deficit spending during recessions and reduced spending in growth periods. The 1937 recession reinforced the necessity of such actions, leading President Roosevelt to embrace this approach more fully.
Step-by-step explanation:
The main idea of Keynesianism, formulated by John Maynard Keynes, is that government intervention is necessary to manage the economy, particularly during economic downturns. Keynes suggested that during such times, the government should engage in deficit spending to boost employment and stimulate the economy. Conversely, in times of economic growth, governments should reduce spending to prevent inflation.
The events of 1937 were pivotal as they demonstrated the effectiveness of Keynesian economics. The U.S. economy had started to recover under President Roosevelt's New Deal, but when the government cut spending in 1937, a recession ensued. This downturn convinced Roosevelt to adopt a more aggressive Keynesian approach, resuming government spending to revitalize the economy, demonstrating the theory's practical application.