If the economy is suffering from demand deficient unemployment then Keynes would recommend

Question

Quizplus · Accepted Answer

Keynes would recommend increasing the level of government spending to shift the expenditure line upwards, which would lead to an increase in aggregate demand and create jobs, therefore reducing demand deficient unemployment. This would be achieved through a fiscal stimulus package, such as increased government spending on infrastructure projects or tax cuts to boost consumer spending. This approach is based on the belief that government intervention can stimulate demand in the short term and help to restore full employment equilibrium. A and D are not recommended by Keynes as they may lead to inflation and a depreciation in the value of the currency. C is not directly related to the issue of demand deficient unemployment.

If the Economy Is Suffering from Demand Deficient Unemployment Then