According to Keynes, the problem during recessions was inadequate aggregate demand, which could be addressed through increased government spending, tax cuts, and monetary policy. While consumer spending is important, it alone cannot stimulate the economy out of a depression, and the key to investment spending is not aggregate supply but rather the expectation of future demand.

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According to Keynes

Question 190

Multiple Choice

According to Keynes,

A) only consumer spending could get us out of a depression.
B) the problem during recessions was inadequate aggregate demand.
C) the key to investment spending was aggregate supply.
D) all of the statements are true.

Correct Answer: