According to Keynes, an unbalanced budget was very appropriate at certain times, particularly during times of economic recession or depression. He believed that government spending was necessary to stimulate demand and boost economic growth during such periods, even if it meant running a budget deficit.

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According to Keynes

Question 102

Multiple Choice

According to Keynes:

A) An unbalanced budget was very appropriate at certain times.
B) An unbalanced budget was appropriate during a full-employment equilibrium.
C) A budget deficit was appropriate most of the time.
D) Tax cuts were always appropriate because of their political appeal.

Correct Answer: