According to Keynes, if the economy is in a recession, the government should:
A) reduce spending to prevent the budget deficit from soaring.
B) let the free market return the economy to full employment.
C) raise taxes on corporations and the wealthy.
D) reduce taxes, increasing purchases of goods and services, and increase transfer payments.

Question

Quizplus · Accepted Answer

Keynesian economics suggests that during a recession, the government should engage in expansionary fiscal policy, which includes reducing taxes and increasing government spending (including transfer payments) to stimulate demand and pull the economy out of recession.

According to Keynes, If the Economy Is in a Recession