The Keynesian approach to fiscal policy advocates:
A) continual budget deficits.
B) manipulation of aggregate demand.
C) budget deficits when economic growth is high.
D) budget surpluses when economic growth is low or negative.

Question

Quizplus · Accepted Answer

The Keynesian approach to fiscal policy advocates manipulation of aggregate demand through government spending and taxation to stabilize the economy, particularly during times of recession or high unemployment. This may involve budget deficits, but the goal is not to continually run deficits. Instead, the focus is on using fiscal policy to support aggregate demand and steer the economy towards full employment.

The Keynesian Approach to Fiscal Policy Advocates