According to Keynes,if private sector demand is insufficient to maintain full employment,the government should:
A)make the economy's natural transition to a lower level of employment as easy as possible.
B)shock the economy with an increase in aggregate demand.
C)reduce aggregate supply to reduce inflation.
D)print money to promote consumer spending.
E)take steps to increase aggregate supply in an economy.

Question

Quizplus · Accepted Answer

According to Keynes, if private sector demand is insufficient to maintain full employment, the government should intervene through fiscal policy measures to increase aggregate demand. This can be achieved by increasing government spending or cutting taxes, which would inject more money into the economy and stimulate consumption and investment. This would create a multiplier effect that would increase output and employment, leading to full employment. Therefore, option B, shock the economy with an increase in aggregate demand, is the best choice.

According to Keynes,if Private Sector Demand Is Insufficient to Maintain