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 Canada 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 provided historical validation of Keynes's theory. This was because it demonstrated that government spending could stimulate economic growth and pull an economy out of a recession. The successful application of his theories in Canada and the UK may have provided evidence of the effectiveness of Keynesian policies, but they were not the historical validation of his theory. Similarly, while interest rate cuts may have helped stimulate demand, they do not represent the full picture of Keynesian economics.

The Historical Validation of Keynes's Theory Came Through The