Keynes believed that the way to prevent recessions and depressions was to
A) reduce spending when there is a recessionary gap.
B) only change tax rates as a means of regulating the economy.
C) maximize the crowding out effect.
D) increase aggregate demand through expansionary fiscal policy.

Question

Quizplus · Accepted Answer

Keynes believed in using expansionary fiscal policy to increase aggregate demand during a recession or depression. This involves increasing government spending and/or decreasing taxes in order to stimulate consumer and business spending and ultimately increase overall demand in the economy.

Keynes Believed That the Way to Prevent Recessions and Depressions