The macroeconomic models that are most supportive of the role of government policy aimed at smoothing business cycles are
A) real business cycle models.
B) endogenous growth models.
C) Keynesian models.
D) Solow growth models.

Question

Quizplus · Accepted Answer

Keynesian models are the most supportive of the role of government policy aimed at smoothing business cycles. They emphasize that government intervention, particularly fiscal policy, can have a significant impact on stabilizing the economy during business cycle fluctuations. Real business cycle models, on the other hand, argue that business cycles are driven by changes in technology and productivity, so government intervention is not effective. Endogenous growth models and Solow growth models focus on long-term economic growth rather than short-term fluctuations, so they are not as relevant to the discussion of smoothing business cycles.

The Macroeconomic Models That Are Most Supportive of the Role