In recent times, the U.S. government has been trying to help the economy through one of the worst economic slumps ever. The policies used are based on _____ theory.
A) Keynesian
B) classical
C) supply-side
D) trickle-down

Question

Quizplus · Accepted Answer

Keynesian theory suggests that during a recession, the government should increase its spending and decrease taxes to increase aggregate demand and stimulate the economy. This is exactly what the U.S. government has been trying to do through policies like stimulus packages and tax cuts, indicating the use of Keynesian theory. Classical theory, on the other hand, suggests that market forces should be allowed to operate freely without government intervention. Supply-side theory focuses on increasing the supply of goods and services to boost economic growth, while trickle-down theory suggests that benefits to the wealthy will eventually trickle down to the rest of society.

In Recent Times, the U