John Maynard Keynes argued that during economic downturns, governments should:
Show answer and explanation
Correct answer: Increase spending even if it leads to deficits
Keynes advocated deficit spending to stimulate economic activity during recessions. He believed increased government expenditure would revive demand and employment.
Keep practicing
More Keynesian Economics and New Deal questions
- Which New Deal policy aimed to stabilize prices and wages in line with Keynesian ideas?
- How did the New Deal reflect Keynesian thought regarding unemployment?
- Which concept is central to Keynesian economics and was applied in the New Deal?
- Which New Deal agency was designed to provide immediate financial assistance to citizens, reflecting Keynesian ideas?
- What was a major goal of Keynesian policies during the New Deal?
- Which New Deal reform regulated banks and restored confidence in the financial system?