Which of the following is consistent with what Keynes believed?
A) Markets automatically self-adjust to full employment very quickly
B) The economy is inherently stable
C) Monetary policy should be used to shift the aggregate supply curve
D) Fiscal policy should be used to shift the aggregate demand curve

Question

Quizplus · Accepted Answer

Keynes believed that fiscal policy, specifically government spending and taxation, should be used to shift the aggregate demand curve in order to manage economic fluctuations and maintain full employment. He did not believe that markets self-adjusted quickly or that the economy was inherently stable, and he did not advocate for using monetary policy to manipulate the aggregate supply curve.

Which of the Following Is Consistent with What Keynes Believed