According to John Maynard Keynes' General Theory of Employment, Interest, and Money, the government should _____ in order to get the economy out of a depression.
A) increase spending
B) decrease spending
C) reduce subsidies
D) increase taxes
E) allow an economy to correct itself

Question

Quizplus · Accepted Answer

According to Keynes' theory, during a depression or recession, there is a lack of aggregate demand in the economy. To increase demand, the government should increase its spending, either through public works programs or by directly injecting money into the economy. This will lead to increased economic activity and stimulate growth.