According to Keynes,which of the following should the government do when the economy overheats?
A)Employ more people.
B)Increase spending.
C)Raise taxes.
D)Practice laissez faire policies.

Question

Quizplus · Accepted Answer

According to Keynes, when the economy overheats, the government should raise taxes in order to decrease demand and cool off inflationary pressures. Employing more people or increasing spending would further stimulate the economy and exacerbate the problem. Laissez faire policies would not intervene at all, and therefore would not address the issue.

According to Keynes,which of the Following Should the Government Do