To stabilize an economy, the Keynesian policy approach tends to favor using _____ over:
A) fiscal policy; monetary policy.
B) monetary policy; fiscal policy.
C) aggregate supply; interest rates.
D) interest rates; aggregate supply.

Question

Quizplus · Accepted Answer

The Keynesian policy approach tends to favor using fiscal policy (government spending and taxation) over monetary policy (control of the money supply and interest rates) to stabilize an economy. This is because Keynesians believe fiscal policy is more direct and effective in influencing aggregate demand.

To Stabilize an Economy, the Keynesian Policy Approach Tends to Favor