Keynesian demand management policies are not effective in fighting stagflation.

Question

Quizplus · Accepted Answer

Keynesian demand management policies rely on increasing government spending and lowering interest rates to stimulate aggregate demand and boost economic growth. However, these policies cannot effectively combat stagflation, which occurs when there is both high inflation and low economic growth. Increasing spending and lowering interest rates in an already inflationary environment can actually worsen inflation and worsen the problem.

Keynesian Demand Management Policies Are Not Effective in Fighting Stagflation