Because Keynes's theory recognized the problem of interest rates being at the zero bound (the liquidity trap),it:
A) perceived the economy as being mostly self-adjusting.
B) favoured the use of monetary policy over fiscal policy.
C) considered technological progress the answer to any economic slump.
D) favoured the use of fiscal policy over monetary policy.

Question

Quizplus · Accepted Answer

Keynes's theory recognized the limitations of monetary policy during a liquidity trap and therefore favoured the use of fiscal policy to stimulate the economy.

Because Keynes's Theory Recognized the Problem of Interest Rates Being