Which of the following policies would a Keynesian expect to produce the largest decrease in income?

Question

Quizplus · Accepted Answer

Keynesians believe that government spending has a significant impact on aggregate demand and economic growth. A reduction in government spending of $100 billion would decrease aggregate demand and could lead to a decrease in income. Transfer payments, on the other hand, are typically designed to support individuals with lower incomes, so decreasing them would likely have a smaller impact on overall income. An increase in government spending or a tax increase could potentially stimulate economic growth rather than decrease income.

Which of the Following Policies Would a Keynesian Expect to Produce