According to Keynes,which of the following can be used to slow down an overheated economy?
A)Decrease government purchases.
B)Decrease taxes.
C)Make more money available.
D)Employ more people.

Question

Quizplus · Accepted Answer

According to Keynesian economics, a government can use fiscal policy to slow down an overheated economy by decreasing government purchases. This reduces aggregate demand, which can help to prevent inflation and other economic problems caused by an overheated economy. Decreasing taxes and increasing government spending (making more money available) would have the opposite effect and could further stimulate an overheated economy. Employing more people would also have a stimulative effect on the economy and would not be an effective way to address an overheating economy.

According to Keynes,which of the Following Can Be Used to Slow