Because Keynes believed that the cause of persistent high unemployment ultimately lay in adequate demand for goods,he proposed that governments use fiscal and monetary policies to
A) manage interest rates.
B) manage aggregate demand.
C) manage savings rates.
D) manage budget deficits.
E) manage imports.

Question

Quizplus · Accepted Answer

Keynes believed that persistent high unemployment was a result of inadequate aggregate demand for goods. Therefore, he proposed that governments use fiscal and monetary policies to manage aggregate demand. Fiscal policies involve government spending and taxation, while monetary policies involve controlling the money supply and interest rates. By using these policies to boost aggregate demand, Keynes believed that governments could reduce unemployment and stimulate economic growth. Therefore, the best choice is B - manage aggregate demand.

Because Keynes Believed That the Cause of Persistent High Unemployment