Which of the following statements about Keynesian views is true?
A) Keynes' analysis was mainly concerned with the long-run
B) Keynes fully supported the classical view that markets were efficient and cleared quickly
C) Demand deficient output meant that governments had a responsibility to boost demand to maintain full employment in the short term
D) Responsibility for fiscal policy should be transferred to central banks because governments could not be trusted to implement tax changes appropriately in times of recession.

Question

Quizplus · Accepted Answer

Keynes argued that during periods of demand deficient output, which can lead to unemployment, governments had a responsibility to stimulate demand through fiscal policy such as increased government spending or tax cuts, in order to maintain full employment in the short term. Keynes' analysis focused on the short-term effects of economic policies in order to stabilize the economy during times of crisis, rather than solely on the long-run. Keynes challenged the classical view that markets were efficient and self-correcting in the short run, and emphasized the importance of government intervention. He did not advocate for the transfer of fiscal policy responsibility to central banks.

Which of the Following Statements About Keynesian Views Is True