Which of the following best describes most economists' approach to economic stabilization until the 1930s?
A)Maintain a balanced budget at all times, under the principle of sound finance.
B)Use a sound finance approach during normal economic times, and a functional finance approach during a recession or a boom.
C)Run larger deficits during recessions and smaller deficits during economic booms, counting on economic growth to be high enough to keep the debt-to-GDP ratio low.
D)Economists were wholly concerned with microeconomics and had ignored problems of government deficits, debt, recessions, and economic growth.

Question

Quizplus · Accepted Answer

Before the 1930s, the prevailing economic philosophy among economists was to maintain a balanced budget at all times, adhering to the principle of sound finance. This approach was challenged and evolved with the development of Keynesian economics during and after the Great Depression.

Which of the Following Best Describes Most Economists' Approach to Economic