When the government conducts fiscal policy,it makes up for a decrease in $\vec { C }$ with:
A) an increase in
$\vec{ G }$ .
B) a decrease in
$\overrightarrow { N X }$ .
C) an increase in
$\vec{ M }$ .
D) a decrease in
$\vec{ Y } _ { R }$ .

Question

Quizplus · Accepted Answer

According to the Keynesian economic theory, when there is a decrease in consumption (C) in the economy, it leads to a decrease in aggregate demand (AD), which can result in a recession or economic slowdown. To counteract this, the government can use fiscal policy to increase government spending (G), which helps to stimulate demand and output in the economy. Therefore, an increase in government spending is the best choice to make up for a decrease in consumption.

When the Government Conducts Fiscal Policy,it Makes Up for a Decrease