According to John Maynard Keynes' The General Theory of Employment, Interest, and Money, what should the government do in order to get an economy out of a depression?
A) increase spending
B) decrease spending
C) reduce taxes
D) increase taxes

Question

According to John Maynard Keynes' The General Theory of Employment, Interest, and Money, what should the government do in order to get an economy out of a depression?  
A) increase spending 
B) decrease spending 
C) reduce taxes 
D) increase taxes

Quizplus · Accepted Answer

According to Keynes, during a depression, aggregate demand falls, leading to a decrease in economic activity and employment. In order to counteract this, the government should increase spending to stimulate aggregate demand and create jobs. This policy is known as expansionary fiscal policy. Therefore, option A (increase spending) is the best choice.

According to John Maynard Keynes' the General Theory of Employment