How did Keynes propose to solve the problem of high unemployment?
A)increase the growth rate of the money supply
B)allow wages to decline so that firms will want to hire more workers
C)put on wage and price controls so that wages won't rise and firms won't have to lay people off to cut costs
D)have the government increase its demand for goods and services

Question

Quizplus · Accepted Answer

Keynes proposed that the government should increase its demand for goods and services through fiscal policy measures such as increasing government spending or cutting taxes. This would stimulate aggregate demand and production, leading to an increase in employment and reduction in unemployment. Option A (increase the growth rate of the money supply) is a monetarist approach that does not necessarily address unemployment directly. Option B (allow wages to decline) may worsen living standards for workers and reduce their ability to consume, thus further depressing aggregate demand. Option C (wage and price controls) may lead to shortages, inefficiencies, and reduced incentives to produce, leading to a stifling of economic growth.

How Did Keynes Propose to Solve the Problem of High