How did Keynesian theory view government budgets during economic downturns?
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Correct answer: Flexible, allowing deficits
Keynes believed governments should run deficits during recessions to stimulate the economy. This approach influenced New Deal fiscal policies.
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More Keynesian Economics and New Deal questions
- Which New Deal act established unemployment insurance and pensions?
- What was the primary aim of the Civilian Conservation Corps (CCC)?
- Which criticism was often made against Keynesian New Deal policies?
- What was the relationship between Keynesian economics and the New Deal?
- Which policy aimed to regulate stock markets and protect investors during the New Deal?
- According to Keynesian theory, what happens when government increases spending during a recession?