Keynesian economists argue that during a recession
A) private sector spending will  rise  and therefore government spending should be reduced in order to help maintain aggregate demand at or near the full employment level.
B) private sector spending will  decline, and therefore government spending should increase in order to help maintain a high level  of aggregate demand.
C) private sector spending will  decline, and therefore government spending should be reduced in order to avoid the crowding out of  still more private  sector spending.
D) private sector spending will  rise  and therefore government spending should be increased in order to provide more stimulus for the economy.

Question

Keynesian economists argue that during a recession
A) private sector spending will  rise  and therefore government spending should be reduced in order to help maintain aggregate demand at or near the full employment level.
B) private sector spending will  decline, and therefore government spending should increase in order to help maintain a high level  of aggregate demand.
C) private sector spending will  decline, and therefore government spending should be reduced in order to avoid the crowding out of  still more private  sector spending.
D) private sector spending will  rise  and therefore government spending should be increased in order to provide more stimulus for the economy.

Quizplus · Accepted Answer

According to Keynesian economics, during a recession, private sector spending will decline, resulting in a decrease in aggregate demand. In order to maintain a high level of aggregate demand, the government should increase its spending to stimulate the economy. This increase in government spending can help create jobs, boost consumer spending, and support businesses that may otherwise struggle during an economic downturn.

Keynesian Economists Argue That During a Recession