According to Keynes, what should the government do in order to get the economy out of a recession?
A) plan for a budget deficit
B) encourage firms to export to other nations, thereby jump-starting the economy
C) follow an expansionary monetary policy
D) follow a contractionary monetary policy

Question

According to Keynes, what should the government do in order to get the economy out of a recession?  
A) plan for a budget deficit 
B) encourage firms to export to other nations, thereby jump-starting the economy 
C) follow an expansionary monetary policy 
D) follow a contractionary monetary policy

Quizplus · Accepted Answer

According to Keynesian economics, during a recession, the government should increase its spending on infrastructure and other public services, even if that requires running a budget deficit. This increased spending will hopefully stimulate demand and lead to a recovery in economic activity. Encouraging exports, following an expansionary monetary policy or contractionary monetary policy may not be effective in jump-starting the economy during a recession.

According to Keynes, What Should the Government Do in Order