How did the Great Depression change economic thinking?

The Great Depression fundamentally altered economic thinking by challenging classical economic theories that emphasized self-regulating markets and minimal government intervention. Economists like John Maynard Keynes advocated for active government involvement to manage economic cycles, leading to the development of Keynesian economics. This shift emphasized the importance of aggregate demand in driving economic growth and highlighted the role of fiscal and monetary policy in mitigating recessions. The crisis also spurred a reevaluation of economic policies, leading to the establishment of social safety nets and regulatory frameworks that aimed to stabilize the economy.