To get the economy out of a slump, Keynes believed that the government should
A) cut both taxes and government spending.
B) increase both taxes and government spending.
C) increase taxes and/or decrease government spending.
D) decrease taxes and/or increase government spending.

Question

Quizplus · Accepted Answer

Keynes believed that during a recession, the government should use expansionary fiscal policy which involves decreasing taxes to increase disposable income and increasing government spending to stimulate demand and boost economic activity. This approach is based on the idea that increased government spending will lead to an increase in consumer spending, which will ultimately lead to economic growth.

To Get the Economy Out of a Slump, Keynes Believed