The historical validation of Keynes's theory came through the:
A) expansion in aggregate demand resulting from drastic interest rate cuts in the early 1940s.
B) successful application of his theories in the United States during the Great Depression in the early 1930s.
C) expansion in aggregate demand resulting from massive military spending in the early 1940s.
D) successful application of his theories in the United Kingdom during the mid 1930s.

Question

Quizplus · Accepted Answer

The expansion in aggregate demand resulting from massive military spending in the early 1940s, which led to the economic boom during World War II, validated Keynes's theory of stimulating demand through government spending. This led to a shift in economic policy and a wider acceptance of Keynesian economics after the war. While there were successful applications of his theories in the US and UK during the Great Depression, it was the wartime economy that provided the most striking validation of his theories.

The Historical Validation of Keynes's Theory Came Through The