During a severe and persistent recession,Keynesians would most likely propose
A)tax increases.
B)a tight money policy.
C)annually balanced federal budgets.
D)macroeconomic stabilization.

Question

Quizplus · Accepted Answer

Keynesians would most likely propose macroeconomic stabilization during a severe and persistent recession. This may include increasing government spending, reducing taxes, and implementing monetary policy measures to stimulate aggregate demand and increase economic activity. The focus would be on boosting economic growth and reducing unemployment. Tax increases and annually balanced federal budgets are more likely to be proposed by proponents of the classical or supply-side school of economics. A tight money policy, which involves reducing the money supply and raising interest rates, would be counterproductive during a recession as it could further depress economic activity.

During a Severe and Persistent Recession,Keynesians Would Most Likely Propose