Keynes argued that monetary policy would be impotent during the Great Depression because a
A)fall in interest rates would stimulate investment.
B)fall in interest rates would not stimulate investment.
C)rise in interest rates should not stimulate investment.
D)rise in interest rates would stimulate investment.

Question

Quizplus · Accepted Answer

Keynes argued that during a depression, a fall in interest rates would not stimulate investment because businesses would not want to invest in new projects when there was already excess capacity and low demand for goods and services. Instead, Keynes believed that government intervention, through fiscal policy, was necessary to stimulate demand and jumpstart the economy.

Keynes Argued That Monetary Policy Would Be Impotent During the Great