Which of the following is the most likely cause of most recessions according to the Keynesian model?
A)a fall in productivity.
B)an increase in taxation and government spending.
C)a fall in expected profits.
D)a rise in the price of oil.
E)a fall in the money supply.

Question

Quizplus · Accepted Answer

According to the Keynesian model, recessions are caused by a fall in expected profits, which leads to decreased business investment and consumer spending. This decline in aggregate demand can lead to a contraction in economic activity and ultimately a recession. Factors such as taxation, government spending, and the money supply may also contribute to the severity of a recession but are not typically considered the primary cause. A rise in the price of oil may impact specific industries and sectors of the economy but is not necessarily the most likely cause of a general recession.

Which of the Following Is the Most Likely Cause of Most