John Maynard Keynes argued that if many households decide at the same time to increase saving and reduce spending,
A)this may benefit the economy in the short run, but not in the long run.
B)the economy will benefit in the short run and benefit by an even greater amount in the long run.
C)this will have a major negative impact on the economy in both the short run and in the long run.
D)this may benefit the economy in the long run, but could be counterproductive in the short run.
E)there will be absolutely no impact on the economy in the short run or the long run.

Question

Quizplus · Accepted Answer

Keynes believed that increased saving could lead to decreased aggregate demand in the short run, which could result in a recession. However, in the long run, increased savings could lead to increased investment, productivity, and economic growth. Therefore, while it may be counterproductive in the short run, it could be beneficial in the long run.

John Maynard Keynes Argued That If Many Households Decide at the Same