According to the Keynesian model,the optimal fiscal policy is to

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Quizplus · Accepted Answer

According to the Keynesian model, during a recession, there is a decrease in aggregate demand which leads to a fall in output and employment. To counteract this, the government should increase its spending which leads to an increase in aggregate demand and output. This increase in spending would result in a cyclical deficit which is a temporary deficit caused by a downturn in the business cycle. As the economy recovers, the government can decrease its spending and concurrently, the cyclical deficit would decrease. Therefore, the optimal fiscal policy during a recession is to increase cyclical but not structural deficits to stimulate economic growth.

According to the Keynesian Model,the Optimal Fiscal Policy Is to