Which is true of John Maynard Keynes?
A)He believed that serious economic contractions were natural phases in an otherwise healthy system.
B)He provided a model that closely resembled that of Adam Smith.
C)He advocated a decrease in the money supply to stabilize the economy.
D)He argued that increased government demand should offset reduced private sector demand to prevent depression.
E)He advocated tax increases to balance the federal government's budget during the Great Depression.

Question

Quizplus · Accepted Answer

John Maynard Keynes believed in government interventions during economic downturns to increase demand and prevent depression. He believed that increased government spending would offset reduced private sector demand and stimulate the economy. This concept is known as Keynesian economics. Therefore, Option D is the correct answer, as he did not advocate a decrease in the money supply, tax increases during the Great Depression nor did his model resemble that of Adam Smith. Option A is also incorrect as he advocated for government intervention during economic downturns.

Which Is True of John Maynard Keynes