Keynesian economic theory suggests:
A)Reducing government involvement in the free-market economy.
B)Proposing long-term solutions in order to create wider swings in the business cycle.
C)A more permanent government involvement in the banking system,even creating a national banking system that owns and operates most of the global and regional banks.
D)Short-term increases in government spending to stimulate the economy.

Question

Quizplus · Accepted Answer

Keynesian economic theory suggests short-term increases in government spending to stimulate the economy during periods of economic downturn. This is known as fiscal stimulus and is intended to increase aggregate demand and create jobs. Keynes argued that during economic downturns, the private sector may not invest enough to maintain full employment and that government intervention is necessary to stabilize the economy.

Keynesian Economic Theory Suggests