According to Keynes,if private-sector demand is insufficient to maintain full employment,the government should
A)act to make the economy's natural transition to the lower level of employment as easy as possible
B)shock the economy with an increase in aggregate demand
C)reduce aggregate supply to reduce inflation
D)print money to promote consumer spending
E)act to make the economy's natural transition back to full employment as easy as possible

Question

Quizplus · Accepted Answer

According to Keynes, during a recession or economic downturn, private-sector demand may be insufficient to maintain full employment. In this case, the government should increase aggregate demand by spending more money, cutting taxes or both, to "shock" the economy back into a growth phase and create jobs. This approach is known as expansionary fiscal policy.

According to Keynes,if Private-Sector Demand Is Insufficient to Maintain Full