In a recession Keynesians emphasize the need to ________ government spending or ________ taxes,which will cause a multiplier reaction.
A)increase;decrease
B)decrease;decrease
C)increase;increase
D)decrease;increase

Question

Quizplus · Accepted Answer

In a recession, Keynesians suggest increasing government spending or decreasing taxes, as this will inject more money into the economy and cause a multiplier effect. The multiplier effect suggests that an increase in government spending or a decrease in taxes will lead to increased consumer spending, which will lead to increased demand for goods and services, leading to increased production and greater employment. This will further boost demand, creating a positive feedback loop. Conversely, decreased government spending or increased taxes will reduce demand, leading to lower production, employment and income, creating a negative feedback loop.

In a Recession Keynesians Emphasize the Need to ________ Government