Which of the following is a mechanism Keynes advocated for dealing with a recession?
A) Raising interest rates.
B) Raising taxes.
C) Increasing government expenditure.
D) Increasing supply incentives.

Question

Quizplus · Accepted Answer

Keynes advocated for increasing government expenditure during a recession as a way to stimulate aggregate demand and boost economic activity. This is commonly known as "fiscal stimulus." Raising interest rates as in option A would actually reduce demand, which would worsen a recession. Raising taxes as in option B would also reduce demand and could decrease investment, further worsening a recession. Increasing supply incentives as in option D may help in the long-term but would not provide immediate relief during a recession.

Which of the Following Is a Mechanism Keynes Advocated for Dealing