John Maynard Keynes influenced the use of fiscal policy in the U.S.by arguing effectively that
A)balancing the national budget at all times was sound economic policy
B)natural economic forces were not necessarily adequate to move the economy toward its potential output level
C)the government did not need to stimulate output in order for the economy to achieve its potential output level
D)increases in taxes and increases in government purchases are equally effective in closing an expansionary gap
E)increases in taxes and increases in government purchases are equally effective in closing a contractionary gap

Question

Quizplus · Accepted Answer

Keynes argued that natural economic forces were not enough to move the economy toward its potential output level and that government intervention, particularly through the use of fiscal policy, was necessary to stabilize the economy during periods of recession or inflation. He advocated for deficit spending during periods of economic downturns to stimulate demand and promote economic growth. This idea influenced the use of fiscal policy in the U.S. and other countries, particularly during the Great Depression and in the post-World War II era.

John Maynard Keynes Influenced the Use of Fiscal Policy in the U.S.by