According to Keynesian economics, what should a government do in a deep recession?
Answer and explanation
Correct answer: B. Increase public spending or cut taxes to support demand
- Step 1: Keynes argued that weak demand can keep an economy in recession. Step 2. The state can offset it with spending or tax cuts. Answer: raise spending or cut taxes. Why not the others: these policies would weaken demand further or do nothing.
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