One major point that Keynes raised pertains to income and spending. He argued that:
A) All income is often spent in the same period of time
B) Oftentimes, people spend more than their incomes
C) The marginal propensity to spend out of additional income is quite volatile
D) Pessimism could cause aggregate spending to fall short of total output

Question

Quizplus · Accepted Answer

Keynes argued that pessimism could cause aggregate spending to fall short of total output, leading to a recession. This is known as the "paradox of thrift," where people try to save more during a recession, but this leads to a decrease in overall spending and further economic downturn. Keynes believed that government intervention through fiscal policy could help stimulate spending during times of recession. Options A, B, and C are not accurate descriptions of Keynes' argument in regards to income and spending.

One Major Point That Keynes Raised Pertains to Income and Spending