Which of the following policies would Keynes have supported when the economy is experiencing unemployment?
A)An open-market purchase
B)A reduction in tax rates
C)An increase in government purchases
D)All of the above

Question

Quizplus · Accepted Answer

Keynes believed in the use of fiscal policies to stimulate the economy during times of unemployment. An open-market purchase by the central bank would increase the money supply and can lead to lower interest rates, which stimulates borrowing and investment. A reduction in tax rates would increase disposable income and encourage consumption and investment. An increase in government purchases would increase the aggregate demand in the economy and can create jobs. Therefore, Keynes would have supported all of the above policies during times of unemployment.

Which of the Following Policies Would Keynes Have Supported When