Assume the economy is experiencing an inflationary gap, Keynesian economists would believe that:
A) flexible wages will restore full employment.
B) the federal government should decrease spending to shift the aggregate demand curve leftward.
C) the Federal Reserve should lower the interest rate.
D) the federal government should increase spending to shift the aggregate demand curve rightward.

Question

​ Assume the economy is experiencing an inflationary gap, Keynesian economists would believe that:
A) ​flexible wages will restore full employment.
B) ​the federal government should decrease spending to shift the aggregate demand   curve leftward.
C) ​the Federal Reserve should lower the interest rate.
D) ​the federal government should increase spending to shift the aggregate demand curve rightward.

Quizplus · Accepted Answer

Keynesian economists advocate for reducing government spending to decrease aggregate demand and close an inflationary gap.

​ Assume the Economy Is Experiencing an Inflationary Gap, Keynesian

Assume the Economy Is Experiencing an Inflationary Gap, Keynesian