According to the Keynesian view, the proper response to a severe recession would be
A) an increase in taxes in order to reduce the budget deficit.
B) an increase in government spending financed by borrowing.
C) a shift toward a restrictive monetary policy to reduce aggregate demand.
D) reliance on automatic stabilizers to direct the economy toward full employment.

Question

Quizplus · Accepted Answer

According to the Keynesian view, during a severe recession, government spending should be increased in order to stimulate aggregate demand and promote economic growth. This can be financed by borrowing, as the focus is on short-term recovery rather than long-term fiscal responsibility.

According to the Keynesian View, the Proper Response to a Severe