The prevailing budget philosophy prior to Keynes called for a balanced budget. Keynes argued that the government should not balance its budget but instead have budget deficits during
A) economic booms.
B) during periods of peace but surpluses during periods of war.
C) periods of inflation.
D) economic recessions.

Question

Quizplus · Accepted Answer

Keynes argued that during economic recessions, the government should increase its spending and have budget deficits to stimulate economic activity and boost aggregate demand. This goes against the traditional belief of a balanced budget.

The Prevailing Budget Philosophy Prior to Keynes Called for a Balanced