Keynes's theory did not endorse the use of monetary policy during the Great Depression because:
A) at the time,the nominal interest rate was very close to zero.
B) during the Second World War,the convertibility of the pound sterling into gold was suspended.
C) under the gold standard,the zero bound on nominal interest rates did not exist.
D) monetary expansions were impossible under a gold standard.

Question

Quizplus · Accepted Answer

Keynes believed that during the Great Depression, the nominal interest rate was very close to zero and therefore, monetary policy would not have been effective in stimulating the economy. He instead advocated for government spending to increase aggregate demand.

Keynes's Theory Did Not Endorse the Use of Monetary Policy