Keynesian economics suggests that during a recession, governments should primarily:
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Correct answer: Expand fiscal policy
Expanding fiscal policy through increased government spending stimulates demand. This was a cornerstone of New Deal economic strategy.
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More Keynesian Economics and New Deal questions
- Which program aimed to support farmers by reducing agricultural surplus under the New Deal?
- What role did deficit spending play in New Deal policies?
- How did Keynesian theory view government budgets during economic downturns?
- 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?